This is the transcript of day 11 of the SCO v. Novell trial, as text, the second Utah trial that began on Monday, March 8, 2010 and ran for 15 days, Monday through Friday, for three weeks, with the Hon. Ted Stewart presiding.

This day, then, is Monday, March 22, the beginning of the final week of the trial, and the witnesses that day were SCO's general counsel, Ryan Tibbitts, SCO's final witness, and then Novell begins to put on its case, beginning with its first witness, Joseph A. LaSala.
Here is Groklaw's eyewitness report from the trial for that day.

The most important piece of all the Tibbitts testimony is when he testified that SCO needs the UNIX and UnixWare copyrights not only for the products business but for SCOsource. May I point out that this directly contradicts what SCO's CEO Darl McBride told the world in June 2003, when he said SCO didn't need the copyrights to go after Linux users? This is something I don't see Novell mentioning, at least in today's materials, but it's a significant piece. Let me show you the details, please. In case you were wondering why the court and the jury didn't credit SCO's witnesses, maybe it's because they contradicted each other.

If you'd like to jump ahead to the transcript's start, please feel free. Or jump to any other day of the trial to cross check things:

Q Mr. Tibbitts, do you have a view as to whether
ownership of the UNIX and UnixWare copyrights is required for SCO to run its UNIX related business?

A I do.

Q What is your view?

A The copyrights are critical for us to run the business that was purchased from Novell in '95, both the SCOsource business and the right to protect that core UNIX intellectual property, and then the products businesses that emanate off of that, to continue to develop and maximize that business opportunity.

Q Couldn't SCO run its UNIX business by just owning the UnixWare copyrights?

A Not our current business, no.

Q Why not?

A Because we own the core UNIX intellectual property and a very critical component of that at this point in time is to protect that IP, and we have got to have that IP to keep other people from encroaching into our marketplace.

Q Mr. Tibbitts, what kind of business would SCO have been left with without these copyrights?

A Well, as I said, we could not fully develop that core intellectual property. We could not protect it. And this venerable UNIX business that has been around for many years that many customers around the world are using would simply die off, and we have got to have that intellectual property
to protect those crown jewels.

So, he's saying SCO needs the copyrights for SCOsource, to protect the IP, but he says SCO also needs them for the software business. Without the copyrights, "this venerable UNIX business" would simply die off. So his story is that SCO can't do a thing, not even breathe, without the copyrights.

That is the exact opposite of what Darl McBride told the SEC in 2007 in this 8K, where he said SCO didn't need the copyrights to run its software business. But more significantly, it contradicts what he
told the world on June 4, 2003, when he said SCO didn't need the copyrights for its litigation purposes. Here it is, as quoted in an article on CNET by Stephen Shankland, which I wrote about and linked to at the time on Groklaw, and you know how zealously SCO reads Groklaw:

If the debate ends up in court, as SCO Chief Executive Darl McBride predicted last week, the agreement would likely be exhibit A, with both sides able to present passages that support their position.

For example, while the contract leaves the copyrights with Novell, a section that gives to SCO "all claims...against any parties relating to any right, property or asset included in the (Unix) business" could be interpreted to give SCO the right to enforce the copyright, Radcliffe said. "The question is, even though (Novell) didn't assign the intellectual property (to SCO), did (Novell) assign the rights to enforce the patents and copyrights?"

The Unix ownership issue is central to a debate about whether companies can be taken to court for using Linux. On May 14, SCO claimed in letters sent to 1,500 of the world's largest companies that using Linux could open them to legal liability because Unix source code has been copied into Linux. ...

SCO vehemently argues that it has copyright enforcement rights, but in any case, it doesn't need the Unix copyright to go after Linux users.

"I think it's perfectly clear we have the rights to enforce copyright claims," McBride said in an interview after Novell challenged SCO's Linux actions. But more likely than a copyright case, would be one based on breach of contract, he said.

"The letter went to 1,500 large companies around the world, the majority of which all have (Unix) System V licenses with us...We do have sublicense rights," McBride said. "They sign up for the fact that they will not misappropriate the code." The sublicenses come through Unix purchases made with direct Unix licensees such as Silicon Graphics, Hewlett-Packard and IBM, he said.

So, when Novell raised doubts as to who owned the copyrights, SCO said it didn't need them. Vehemently. Then, seven years later, when it wants the court to give them to the company, it claims it needs them. So. Which. Is. The. Truth?

My point is that SCO told the world in 2003 that it didn't need the copyrights to sue people. Later, in 2007, when Judge Dale Kimball ruled on summary judgment that SCO didn't own the copyrights, SCO's McBride told the SEC and the world that it didn't need them for its software business. That means it doesn't need them, period. There it is in black and white. He said the same thing in the May 28, 2003 earnings conference call, that this litigation path wasn't about copyrights; it was about contracts. He explained the company's position with more words in the May 30, 2003 conference call:

McBRIDE:
SCO's enforcement actions embodied in the suit against IBM and our letter to 1500 commercial Linux users are based on the contract rights that flow from SCO's 30,000 Unix System V licenses with more than 6,000 entities. Our actions to date are based on this extensive set of licensing and sublicensing agreements. None of SCO's enforcement actions to date have been based on copyrights or patents. There has been no assertion by Novell or anyone else that SCO does not hold these contract rights.

As to the copyrights, I have two points to make. First, the copyrights are not important to our current enforcement actions. Second, we have stated in the past, and we reiterate today, that we own the Unix copyrights and the rights to enforce these copyrights. Novell has publicly challenged our position with regard to copyrights. We strongly disagree with Novell's position, and view it as a desperate measure to curry favor with the Linux community. I have turned the Novell matter over to our attorneys; over the coming weeks, we will take all steps we deem appropriate to rectify the issues.

Some of you may be familiar with the text of the 1995 SCO-Novell agreement, since it was contained in a prior SEC filing. To underscore to you the broad set of rights we hold, let me summarize a few of these provisions. Firstly, we own, this is SCO, SCO owns all rights in ownership in Unix and UnixWare. All versions, and all copies, all updates, including Unix and UnixWare source code. SCO owns all claims arising against any parties relating to any rights, property, or assets in the business of Unix and UnixWare. SCO owns all software and sublicensing agreements, including the source code, and sublicensing agreements with OEMs, end-users, and educational customers. The total number of these agreements is approximately 30,000. Again, those were pulled from the text of the agreement.

Now let's move on. Let me explain why SCO has decided to base our initial enforcement actions on our Unix rights. Among our Unix assets, SCO owns all of the Unix licensing agreements and sublicensing agreements. There are approximately 30,000 such agreements with over 6,000 entities. These licensees include virtually all major hardware vendors, many software vendors. These sublicensees include a very large number of the of the Fortune 2000 companies, and many companies around the world. Each and every one of these licenses and sublicenses contain a substantial set of rights and obligations for the licensee and sublicensees. These license agreements impose a standard of care that applies not only to the company, but also to all of its employees. These agreements address obligations that pertain not only to the original source code, but also to the code embodied in the derivative works produced by the licensee. So in other words, significant portions of SCO's Unix contract rights extend not only to the source code, but also to the many derivative works of that code.

The rights SCO holds in connection with these license and sublicense agreements are substantial. Because of their number and the the stature of the licensees and sublicensees, the reach SCO has is broad and deep. For these reasons, SCO has proactively chosen to base its current enforcement actions on this set of rights. We do not rule out the possibility of subsequent enforcement actions taken on, on the basis of copyright, but at this point we have elected not to do so.

So, beginning on June 4, 2003, SCO told a consistent story that it didn't need the copyrights to sue people, as it had already begun to do.

SCO previously hired outside attorneys to serve as its chief legal counsel, but about 10 days ago hired Tibbitts, who has experience in litigation. Previously he worked at Center 7, a management software company that like SCO includes the Canopy Group as a major financial backer.

"The Canopy Group said SCO has got to hire somebody in-house to manage the IBM litigation," Tibbitts said. "My background is litigation. With the firestorm that has started, they need someone who can manage and oversee the litigation."

So he was there, with the company, when Darl said those words. His background is indeed litigation, by the way, and in fact he handled the Caldera v. Microsoft antitrust case for Caldera, whose interest was later taken on by Canopy. Here he is, listed on the complaint. Here's what he was doing when he was at Center 7:

A breach-of-contract lawsuit by a tiny technology company against Computer Associates could pack a financial wallop - almost $100 million.

The case, involving CA and Center 7 Inc., is scheduled for trial in federal court in Salt Lake City Aug. 11.

Lindon, Utah- based Center 7 is seeking damages approaching "nine figures," or $100 million, according to Ryan Tibbitts, that company's general counsel.

A judgment even short of $100 million could exceed $69.5 million, the upper edge of CA's fiscal 2004 guidance on earnings based on generally accepted accounting principles, or GAAP. On a non- GAAP basis, which excludes some charges, the fiscal 2004 earnings consensus estimate of analysts polled by First Call/Thomson Financial is about $336 million.

"They FUDDED us in the marketplace so people were afraid to do businesses with us," charged Tibbitts, referring to the tactic used by large technology concerns to sow fear, uncertainty and doubt (FUD) about their smaller competitors...

Just weeks after the initial lawsuit, on June 1, 2001, CA filed a counterclaim against Center 7 and its financial backer, the Canopy Group, the Lindon-based venture capital firm....

Tibbitts said that when Center 7 was ramping up its partnership with CA, it had about 120 employees versus about 30 now.

"For all practical purposes, Center 7 is moribund now given what has happened with CA," he said.

See a pattern here? What I see is he sues large companies to try to make millions. Twice he was successful. With SCO, not so much. Anyway, he was no stranger to Canopy litigation or to SCO when he was "newly hired".

Prior to Center 7, as he tells in the beginning of his testimony, he worked for Lineo, which was another Canopy company. So he's family, you could say.

From Ralph Yarro's 2003 interview with Bob Mims of the Salt Lake Tribune, when Yarro was still at Canopy Group, about going after anyone who messed with them to their "utter destruction":

In 2000, it was the colossus Microsoft paying $250 million to settle an antitrust suit by Canopy's Caldera Inc. (now SCO Group). This past August, behemoth Computer Associates International paid $40 million to settle a software-licensing dispute with Canopy and another of its 30-some companies, Center 7....

Richard Nelson, president and CEO of the Utah Information Technology Association, credited that vision -- and ready provision of management, legal help and other expertise to its investments from sister companies -- for Canopy's success.

See what I mean? Lineo, one of Canopy's sister companies, was also deeply intertwined with Canopy. From SCO's 10K from 2002:

In January 2000, the Company and Lineo entered into a stock purchase and sale agreement. As of January 2000, both Lineo and Caldera Systems were majority owned by Canopy. Pursuant to the stock purchase agreement, the Company acquired 3,238,000 shares of common stock of Lineo (approximately 17 percent of Lineo's outstanding voting stock) in exchange for 312,500 shares of the Company's common stock.

Because Lineo was also majority owned by Canopy, the investment in Lineo was accounted for as a transaction between entities under common control with the transfer being reflected in the Company's consolidated financial statements at Lineo's carry over basis. At the date of the agreement, Lineo had a stockholders' deficit of which approximately $150,000 was associated with the 17 percent interest the Company acquired. Accordingly, the investment was recorded at a nominal value of $1.00 because the Company did not have any obligation to provide additional funding to Lineo. The Company recorded the estimated fair value of the shares of its common stock issued to Lineo at $10,000,000 with the difference between the $10,000,000 and the $1.00 investment recorded as a distribution to Canopy.

On May 11, 2000, Canopy transferred 1,762,000 shares of Lineo's common stock held by Canopy to the Company. This transfer was reflected as a capital contribution by Canopy at Lineo's carry over basis of $1,966,000. As a result of this transaction, the Company had a total of 5,000,000 shares of Lineo's common stock (approximately 14 percent of Lineo's outstanding voting stock)....

So, for sure Tibbitts was in place, in SCO, as their chief legal counsel, when SCO's CEO told the world it didn't need the copyrights to run its new litigation business, but he was very likely very much aware of all this SCO stuff even before, being part of the very litigious Canopy family back then. And yet here he is on the stand, saying the exact opposite, that SCO can't run any part of its business without the copyrights.

SCO put out a press release, incidentally, on June 6, 2003, claiming it owned the copyrights, this being the day they told us that a paralegal had found Amendment 2, but even in that release, it said it didn't need them, because it was relying on contracts:

"SCO is the owner of the UNIX operating system, as well as all of the UNIX contracts, claims and copyrights necessary to conduct that business," said Sontag. "None of the litigation we are currently involved with asserts claims based on copyrights...."

So they claimed they had them, but as of that date none of the lawsuits, or threatened litigation as per the May 2003 letters to the Fortune 1500, had anything to do with copyrights or required SCO to own them. It wasn't until July of 2003, as announced in the
July 21 teleconference, that SCO even bothered to register the copyrights, indicating beyond doubt that they weren't thinking about copyrights at first. In other words, SCO didn't need the copyrights to sue or to sell, or at least that is what this public company told us all at the time.

SCO's story kept morphing, over years and years, of course, and Tibbitts on the stand tells the newest story, that the company can't tie its shoes without the copyrights, and hence UNIX will die off, but that isn't the entire story, by any means. By the way, I wonder how they explain all the other Unix flavors not dying off, when IBM, HP, Oracle, etc. do not own the UNIX copyrights?

Here's what McBride said on the stand, in this trial, by the way, if you want to compare:

Q. Mr. McBride, yesterday you told this court and jury that you believed that you needed the UNIX copyrights in order to run your business, correct?

A. That is correct.

Q. Let me show you what we have marked as R45. Mr. McBride, R45 is a form 8-K that SCO Group filed on behalf of -- that SCO Group filed on August 14th, 2007; correct?

A. Yes, that is correct.

Q. And a form 8-K is a form where SCO is advising
the SEC and the market at large of material facts that affect its business, right?

A. Pardon me, I didn't get the last question. I was looking here.

Q. Form 8-K is a form by which a company advises the Security and Exchange Commission and the market at large regarding material?

A. Yes, that is right.

Q. And you reviewed this document before it was filed with the SEC; correct?

A. Yes, I did.

Q. And you wouldn't have filed it with the SEC if you didn't think it was accurate, correct?

A. Correct.

Q. Now, I want you to listen carefully to my question, if you could, sir. It is true, isn't it, that if you turn to the last page of the document, in the one, two, three, four, fifth paragraph --

THE COURT: Why don't you offer it before we go any further, please.

MR. ACKER: I would move for admission of R45 with redactions, Your Honor.

MR. SINGER: No objection.

THE COURT: It will be admitted.

(Whereupon, Defendant's Exhibit R45 was
received into evidence.)

Q. (By Mr. Acker) If we could go to the last page in the one, two, three, four, fifth paragraph. Mr. McBride, isn't it true that although we have redacted portions of this document that what you told the SEC and the investing public, contrary to what you have told this court, is that even without ownership of the UNIX copyrights, that SCO's "ability to continue to develop and support all versions of UnixWare and OpenServer as well as the recently announced OpenServer 6M and UnixWare 7M as well as our new mobility products will not be impacted." Didn't you tell the market that?

A. This is part of what I told them. There is more nuances in other parts of this document that, um, come into play on this.

Q. Didn't you tell them that you could run that part of your business without ownership of the UNIX copyrights?

A. I told them that we could run this part which relates to the products. That as we talked yesterday, there is the -- it is like a tree analogy of the source code coming up through the tree that was the IP licensing part. We had a licensing group and we had a products group. Yes, we believed that the branchs off this tree, UnixWare and OpenServer, we could run our business with -- without the copyrights, just like HP, IBM, all of the other licensees of
UNIX can run their businesses as well. The part that we differ on here is we were unable to run our business for the licensing side without the copyrights. And the licensing side was really the future of the company.

Q. So let me get it straight so the jury understands. You could operate as a software company without the UNIX copyrights, but you couldn't run your SCO source campaign without the UNIX copyrights. Do I have that correct?

A. Mostly.

The day before, here's what he'd testified to, when the judge asked him a question:

Q. Let me interrupt you three, if I might, for a moment, Mr. McBride, and ask is ownership of the UNIX copyrights required for SCO's business?

A. Yes, absolutely.

Q. Can you explain why ownership of the UNIX copyrights is required?

A. Well, you can't make copies of things if you don't have the copyright protection. You can't go out and do deals with people. You can't enforce your rights if somebody tries to take advantage of your property. There are a number of reasons. It would be like the Beatles trying to protect their music catalog without having the underlying copyrights. You have to have the copyrights to protect it.

So first you don't need them at all, because SCO relies on contracts. That's 2003. Then in 2007, you don't need them to run the software business. Then in 2010, you need them or your entire business will die. Then you don't need them a bit to run the software business, only to do licensing deals like with SCOsource. Then you need them for everything.

At the same trial, McBride here even contradicts himself, thanks to Novell reminding him about the incriminating 8K. So he changes his first testimony -- that they needed the copyrights for everything -- and modifies it to say you need them for the SCOsource stuff. Meanwhile Tibbitts is back to saying they needed them for everything.

No wonder the court didn't put a lot of weight on this testimony. Where would you put it? Which story? If you lean on this testimony the least little bit, it all falls down and goes boom.

Speaking of the entire story, here's how SCO characterized the ruling by Judge Stewart in its appeal:

The district court also cited testimony from SCO witnesses Darl McBride and Ryan Tibbitts for the proposition that SCO could run its UnixWare product business without the copyrights (A3010-11), although their testimony carefully and consistently pointed out that protecting the underlying technology from infringement in contrast to simply licensing a software product required the copyrights. (A2421:997(McBride); A2640-41:1844-46(Tibbitts); A2642:1850- 51(Tibbitts).)

That isn't, by my reading, what Tibbitts testified to. He said they needed the copyrights for both, for licensing products and for protecting against infringement. But who's counting? Well, me. Here's more on what SCO said in its appeal:

SCO's need to bring copyright enforcement actions does not turn on the existence of the SCOsource program whose demise Novell focused on at trial, and which the district court cited. As SCO's General Counsel Ryan Tibbitts explained, if SCO "could not protect" the "core intellectual property" in UnixWare, then "this venerable UNIX business that has been around for many years that many customers around the world are using would simply die off, and we have got to have that intellectual property to protect those crown jewels." (A2641:1845-46.) SCOsource was simply the name given to the licensing program and division by which SCO sought to monetize, without the need for litigation, those parties who were, in SCO's view, infringing on its rights by using UNIX technology. Without the ability to sue or license such users, particularly of a "free" Linux product, SCO's UNIX business "would simply die off," as Tibbitts testified. (Id.) Thus, "the intellectual property in UNIX [was] an important part of the going forward UnixWare business" that SCO had purchased. (A2321:12-14.) The district court was simply wrong when it found that SCO did not acquire the rights to pursue
SCOsource (A2996-97¶125); even Novell's General Counsel admitted that SCO obtained the right to protect its business (A2675), and that is what SCO was attempting to do through SCOsource.

Whateve, guys, whateve. But that isn't what Tibbitts said, and it's not what Darl McBride said repeatedly in 2003 either. He said he already had the necessary authority to sue, even without copyrights. So Tibbitts and McBride did not testify to the same thing, but rather they contradicted each other. No doubt that hindered folks from accepting their testimony, since you'd think, if they were being truthful, a CEO and its General Counsel would be on the same page.

By the way, search for the phrase "going forward UnixWare" on this day's transcript, and you won't find it in Tibbitts' testimony anywhere. It was Mike DeFazio who agreed to it, on being asked on March 24th, in his deposition video the following:

Q. And was the intellectual property in UNIX an important
part of the going forward UnixWare business?

A. Yes.

Long-time Groklaw readers will probably remember Tibbitts best, though, from his famous Declaration in the IBM litigation, where he couldn't comply with a deadline because Christmas got in the way. That's one of my all-time favorite moments in that litigation. Maybe in all of them. SCOfolk are so nervy. They say what they say, and if you laugh out loud, they don't care. Maybe it'll work. Hey, you never know. If they get a new trial from the appeal, I've no doubt we'll hear yet another story about what they need in the way of copyrights and what they *really* meant when they said all these contradictory things.

Over the weekend, the lawyers for both sides had filed various motions, and they are dealt with before the jury enters the room.

Before the jury comes in:

As usual, the judge and the two sides' lawyers handle various issues the jury isn't supposed to listen to. Up first, the judge rules on some motions, all of which you can find on that link. SCO had filed a motion, Objections to Novell's Designation of Testimony of Michael Defazio. That means SCO didn't want Novell to be able to play certain parts of the video deposition, but the judge rules against SCO on that one. Novell had filed a motion that the judge also denies, seeking to ask witnesses about prior court rulings. He is still viewing it as prejudicial, for one thing, and he believes the time frame that matters is 2003 and early 2004. If that is so, why was Dr. Christine Botosan allowed to talk about all the years up to 2007, one can't help but ask, and the judge had thought about that:

THE COURT: The Court would note, however, that the question of these Court rulings might be relevant to the issue of punitive damages, specifically there ought to be a means whereby the defendants can respond to the assertions that were made in the opening statement that the so-called -- well, the claim to title to the copyrights exists on the Novell Web sites to this day. Therefore, the Court will allow a witness to be asked the question why do they remain on the Web site. And if that witness can truthfully testify that they are there because of the prior court rulings, the Court will allow general reference to the court rulings, but the Court will not allow any reading of the rulings or anything more specific than that.

There was also a motion by Novell to bar Troy Keller from being called by SCO, because he's a last-minute witness, not disclosed by SCO prior to the close of fact discovery, and because "SCO used attorney-client privilege as a shield to withhold relevant documents and prevent Novell from inquiring in depositions about the details of activities to which Mr. Keller will testify." But the judge rules he can testify, and if a deposition is needed, he'll make arrangements for that to happen. As for lawyer privilege issues, the judge says he won't allow any testimony that wasn't explored during depositions due to claimed privilege.

A final issue is raised by Stuart Singer for SCO:

THE COURT: Anything else?

MR. SINGER: Your Honor, before we turn over to Novell after Mr. Tibbitts, we would like to read in certain paragraphs of the answer that we believe constitute admissions. The objection that Novell raised last week was rejected by the Court. May we be permitted to do that after Mr. Tibbitts' testimony?

THE COURT: Mr. Jacobs, you wanted to reply?

MR. JACOBS: Two things, Your Honor. I believe what the Court said was we would see how things unfolded this week to see if anything needed to be revisited in that connection.

THE COURT: That is what the Court said.

Mr. Singer, the point the Court was trying to make is that though apparently in defendant's mind there is now
some way to distinguish between UNIX and UnixWare, I don't believe that is yet before the jury. What I was anticipating is that during the course of their case, that they may try to make that distinction. If they do, then I'm going to allow you to read what you want. But you have your case, two more witnesses, so you will have an opportunity to do it. I would rather we do it only if it's justified. I don't want to confuse the jury any more than is necessary by having you out of the blue stand up and read that because I don't think they would understand the significance of that.

MR. SINGER: We understand, Your Honor.

MR. JACOBS: The only second point is that, as Mr. Singer acknowledged the other day, one important point of clarification would be, as Mr. Singer proposed, to say UNIX and UnixWare copyrights existing up to the date of the asset purchase agreement. There has never been a claim by Novell that we own copyrights to material created after the asset purchase agreement by Santa Cruz or SCO.

MR. SINGER: That's not a point of dispute.

THE COURT: All right. Ms. Malley, will you please bring the jury in.

So the jury is brought in and I've discussed that at length already, so let's skip ahead to Novell's first witness, Joseph LaSala. Just one more piece from the Tibbitts testimony:

Q Now it is true that SCO has offered to sell its business without the UNIX copyrights, correct?

A At this point in time the copyrights were potentially going to go with that business when the issues get cleared up, yes.

Q You're aware of a proposed transaction just in the last year whereby SCO would have sold its business and retained solely the UNIX copyrights, correct?

A Correct.

Q So you then were -- that is SCO was undertaking to sell its business but believed that someone could buy and operate
that business and not receive the UNIX copyrights, correct?

A Well, that's a portion of our business, as I said.

Q Again, just so we're all clear, SCO itself has proposed transactions and preliminarily entered into one transaction to sell its entire business but retain the UNIX copyrights?

A No, not our entire business, absolutely not.

Q The business that was related to UNIX, right?

A The product business, not the intellectual property business.

Q Just so we're clear -- thank you for that correction -- what SCO has proposed to do is sell the UNIX business -- product business, but retain the UNIX copyrights?

A Yes, and the rights to enforce those copyrights.

So it's established right there that this venerable business can go on and on and on without the copyrights, and worse for SCO, that SCO knew it. Did we know, we the public, that that proposed deal would mean the copyrights would someday transfer too? I don't recall that piece.

Can you believe SCO is finally done? Tibbitts leaves the stand saying, "It was a lot of fun."

Novell's First Witness, LaSala:

He starts off being asked questions by Morrison and Foerster's Eric Acker. LaSala used to be with Novell, but he no longer is, having moved to Discovery Communications, as in the Discovery Channel, in 2008. So he's no longer affected in any way by the outcome of this trial, unlike Tibbitts who stands to make a bundle, as Sterling Brennan eventually stresses to the jury on the last day of the trial.

LaSala recounts the in-house discussions about Darl McBride asking Novell to "clarify" the copyright ownership issue. It wasn't until December of 2002 that he took any of it seriously, when he heard for the first time that SCO was planning a licensing program, what eventually was called SCOsource, which SCO announced in January of 2003. SCO was indicating that it wanted Novell to provide SCO will all the agreements associated with the APA. He explains that his concern was based on, among other things, the fact that Novell was interested in Linux, so any campaign against Linux was of concern:

Q. Why is Novell concerned that SCO is announcing this SCOsource product? Why does that create issues for Novell?

A. Principally because Novell, as I mentioned a few moments ago, had previously announced its intention to get involved in the Linux business. There had been a lot of work done, there had been a lot of planning done, and we viewed Linux as an area of computing that we thought we could really create some value and service customers well. We saw this as a threat to our potential business opportunities and our ability to be successful with Linux.

Q. Why was this campaign a threat to Novell's intent to get into the Linux business?

A. Because if Mr. McBride and SCO were threatening Linux end users with copyright infringement and making demands for payment from them, that would have the potential to slow down our own initiatives and throw some roadblocks in the way of our ability to conduct our own business. It would effect existing relationships with customers as well as potentially future relationships with potential customers.

Acker is establishing that SCO started the ruckus, and everything that Novell said and did was in reaction to this threat by SCO against Novell's business interests. In February, LaSala relates, McBride called a colleague in Novell again, and when he was told Novell wasn't in a position to evaluate SCO's request at that time, McBride threatened to call Jack Messman, then CEO, himself. So then LaSala sat down with his staff to review the APA:

Q. Upon that review, what conclusion did you reach?

A. Well, the conclusion that I reached after our review of the asset purchase agreement was that Novell was the rightful owner of the UNIX copyrights, and that they had not transferred to SCO as a result of the asset purchase agreement that was executed in 1995.

In March, SCO sued IBM, and LaSala says at that point he viewed it as just the first salvo against Linux users. In May, he and Chris Stone called McBride, and Darl again repeated his request "to have an amendment to the asset purchase agreement so that SCO could get the copyrights." This testimony contradicts Darl, I believe, who claims he never asked for the copyrights, just for "clarity". Stone told Darl forgeddaboutid. Novell wasn't going to join SCO, Novell owned the copyrights, and it intended to keep them.

At some point, LaSala saw an unexecuted Amendment 2, but he viewed it as a nullity, because it wasn't signed. He did ask his staff to try to find an executed copy, but they couldn't find any. Then Novell got one of the SCO letters to the Fortune 1500:

Q. What was the reaction in the software community when this letter went to Mr. Messman as well as thousands of letters, to 1,500 other companies?

A. It was -- the attitude was game on here, I guess. Mr. McBride has decided to assert, we believe incorrectly, ownership of the UNIX copyrights against hundreds of companies including Novell, and is seeking to enforce what he believed to be were his company's rights with respect to the ownership of the UNIX copyrights against Linux end users. So the reaction in our company was profound, and the reaction throughout the computing industry was like nothing I had seen in the time that I was at Novell working in the computing industry. There was a lot of commentary on it and a lot of information around the web with respect to what Mr. McBride was up to. It was quite concerning I would say to most companies and most people knowledgeable and involved in the industry.

Q. Did Novell make a decision sometime after May 12th and after Mr. Messman received this letter that it needed to
respond?

A. Yes, we did.

Q. Was that response to be public?

A. Well, after we received this letter, as you might imagine, I got together with my colleagues and we began thinking about what an appropriate response would be, and whether the response should be private or public. We concluded after some thought and deliberation that we finally had to make the public aware of our position on this very important issue, because Mr. McBride's campaign against Linux was in full swing about this point. To my knowledge Novell had made no public comment at all at this point in time. That is my recollection. We thought, given the full force of the campaign that had been launched, and now that this May 12th letter, which made some demands on Linux end users and some allegations that we thought were unfounded and inappropriate to make, we felt it was important to respond specifically and substantively to Mr. McBride's letter and to make that document public as well.

Q. What form was the response to take?

A. In the form of a letter to Mr. McBride and in the form of a press release publishing in effect the letter to the public.

So Acker here is letting the jury know that Novell didn't just attack SCO, as SCO likes to portray it. It was reacting to public statements and activities by SCO, pretty much forcing Novell to say something, since it believed SCO was making statements that were not true about who owned the copyrights. The statement went out on May 28, he testifies, not because that was SCO's earnings conference call date, because he didn't know about that, but because that was when they finished working on the statement:

Q. What was the reason for putting out the letter and responding to Mr. McBride? Was it done in order to somehow injure SCO or Mr. McBride, or was it done to protect Novell's interests?

A. It was totally motivated to protect Novell's interests. I have explained to you a little bit about our initiative into this business, this Linux business. As you can imagine, for a company that was preparing to devote a lot of resources and spend a lot of money getting into the business, this campaign of SCO's and Mr. McBride's really had the potential to disrupt all of that. With due respect, I had no opinion and I had really no care, per se, with respect to Mr. McBride or Mr. McBride's business. I was concerned about Novell's business and Novell's business interests.

Was the statement true when you made it, he is asked, and he says yes. He still believes it, seven years later, that Novell owns the copyrights. So much for constitutional malice, by the way, since with slander of title, that's the bar set, meaning you have to know that what you are saying in public is false when you say it and you say it anyway. Brennan explains all that in his closing arguments on the last day. But this is the testimony that shows that there couldn't be any such constitutional malice, since LaSala believed the statement was true back then and he still does.

The rest of the testimony is similar, such as about the June 6 statement, that it too was reactive on Novell's part, answering something SCO was publicly stating and something that McBride was privately threatening to say in public that day about Messman violating SEC regulations if Novell didn't say something McBride wanted said after he produced a signed copy of Amendment 2:

Q. Why did Novell put this out to the public? Why did Novell do this?

A. Again, I think there were two motivations for Novell putting this out to the public that morning. The first we
have talked about, those allegations that Mr. McBride had leveled against us, and we felt it important to respond to him and we did that, so that he would refrain from saying that our company had violated the securities laws on his 11:00 call that morning. Perhaps more importantly with respect to the ownership issue of the copyrights, we were getting -- we, the company, and colleagues of mine in the company were getting calls from the press that morning, asking us for comments on the fact that SCO had found and identified amendment number two, and that SCO was taking the position that amendment number two cleared up the question of ownership of copyrights. Apparently someone had leaked that to the press, and we were getting numerous calls that morning, and we felt compelled to be responsive to those, again, particularly in light of the fact that Mr. McBride had scheduled an 11:00 call that morning. So we wanted to get something out and we needed to do it quickly.

Later there is more correspondence with McBride, because he kept making public statements:

Q. Now, why is it on June 26, 2003 that in this letter to Mr. McBride that you're referencing the public statements since June 6th, and you're telling him his statements are wrong. Why do you do that?

A. Well, it had become a bit of a practice of ours to try to rebut at every opportunity that we could every misstatement that Mr. McBride made, public misstatements that Mr. McBride made about the ownership issue. I must tell you that it was a challenge to keep up. I'm sure that we missed some occasions, but in this instance we were writing in furtherance of the June 6th letter, and we were doing so in response to continued public statements being made by SCO that it was the rightful owner of the copyrights. I would remind you that we were doing this in a private way. We were sending private letters back to him and he was making public statements.

Q. Why did you feel it was necessary to tell Mr. McBride privately that his statements about ownership were wrong?

A. Well, we wanted it to be clear to Mr. McBride that he should not be relying on anything that we had previously
said with respect to the ownership of the copyrights in a way that would permit him to make -- continue to make assertions that SCO was the owner of the copyrights. That is what this letter did. It was, again, to put Mr. McBride on notice that we believed strongly that we were the rightful owners and that they were not, and that to the extent that they may have been relying on something that we had previously said on June the 6th, that they should not so rely on that. To be clear, we believed that their statements were wrong.

So far, Novell is talking privately and McBride is talking publicly. More letters, taking us into August:

Q. Why did you take that step? Why did you write Mr. McBride this letter on August 4, 2003 and tell him what Novell's position was under the asset purchase agreement as amended by amendment number two?

A. Because SCO had taken yet additional steps in a very public fashion to assert its ownership of the copyrights, and it did so by seeking to register its copyrights at the U.S. Copyright Office. That is public. As I mentioned in one of my previous answers, we thought it is important to continue to put SCO on notice that we disagreed with the public positions they were taking. We did so repeatedly throughout the course of the summer. This was the latest example of that effort on our part.

It's still all private on Novell's side. By then, Novell has bought Ximian, and it was in negotiations to buy SUSE. Then, in December, Novell finally went public with all the correspondence:

Q. Also, in addition to your letters to Mr. McBride on August 4 and June 26, did you also attach Mr. Tibbitts' reply to those letters?

A. We did.

Q. Why?

A. Well, we thought it was important to really allow the public to see the communication on the substance of a very important issue, the ownership of the UNIX copyrights. And, for the first time, as I alluded to prior to our break, we had Mr. McBride out there, over the course of, you know, almost an entire year, making public statements as to SCO's ownership of UNIX. And, as we have gone through here, we were making -- we were sending private letters back to Mr. McBride and other
representatives at SCO correcting them at every turn, where we had the opportunity.

And we finally got to the point where we, again, felt it was important to allow the public to see both sides of the argument so that they could make some judgments, themselves, about this very important question because all they were seeing, as a matter of publicity, were the statements and comments that Mr. McBride and his colleagues were making about ownership.

And, all along, we were taking -- as we recounted, we were taking every reasonable opportunity we could to let them know that we thought that those were wrong. So we finally got to a point where we said to ourselves, "Hey, look, we've got to get our position out there, let the public see it, let the public see the retort from Mr. McBride or from SCO." And that's why we did this.

Singer then does his questions, mainly trying to make LaSala look like he's not being truthful about IBM's role, and then he swings back to LaSala saying McBride asked for copyrights:

Q. I'd like to go back now to something you testified to near the start of your direct examination, your discussions with Mr. McBride regarding copyright ownership.

Now, is it your testimony that Mr. McBride specifically said, in your presence, that he wanted Novell to transfer copyrights to SCO?

A. I don't recall that he used the word
"transfer."

Q. He was seeking a clarification, was he not, that those rights already existed with SCO, correct?

Singer asks if Novell ever tell SCO not to do SCOsource, and LaSala says no. And there's a whole lot of this kind of exchange:

Q. And, in fact, I think what you testified to -- and you tell me if I'm wrong -- is that you turned the company upside down trying to find whether there was a signed version of Amendment Number 2. Do you recall that?

MR. ACKER: Objection. That misstates his testimony.

Q. BY MR. SINGER: Isn't that what you said, sir, you turned the company upside down trying to find it?

A. I asked Mr. Lundberg to do that.

Q. And the reason you asked Mr. Lundberg, who is counsel for -- another lawyer for Novell to do that is
that you understood that Amendment Number 2 was very important because it would clarify the issue as to who owned the UNIX copyrights, right?

A. If amendment -- no. That's not correct.

Q. So you just asked Mr. Lundberg to turn the company upside down for a document that didn't matter. Is that your testimony?

A. No. That's not my testimony.

Just around and around like that. Another example:

Q. And, is it also true that you have no view, yourself, as to whether the UNIX copyrights are in fact required for SCO to conduct its business with respect to the UNIX and UnixWare technologies it purchased?

A. I am not aware that SCO has a need for the copyrights to conduct the business that it purchased.

Q. Well, when you were asked that question at your deposition -- and this is page 45 --

MR. ACKER: Which deposition? February 8, 2000 --

MR. SINGER: February 8, 2007, page 45, line 13 to line 17.

MR. ACKER: Let me have a sec, please. I'm sorry. Okay.

Q. BY MR. SINGER: Do you recall giving the following testimony?

Which is clip 3, Mr. Calvin.

(Video clip played as follows:)

Q. Do you have a view, as you sit here today, as to whether SCO needed any copyrights to exercise its
rights with respect to the acquisition of UNIX and UnixWare technologies?

A. I don't have a view.

I wonder what the jury was thinking and feeling at this point. Singer makes it sound like he thinks LaSala is contradicting his earlier testimony, but to me it's a difference not worth mentioning, just saying more or less the same thing, with one way of saying it a little more to one side than the other, true, but worth belaboring? Acker must feel the same, because after the next badgering exchange, he says, "Your Honor, I'm just going to object. It's not inconsistent. They can keep playing clips, but they are not inconsistent." The judge rules that the jury can decide, so on it goes. But then Singer goes too far, and he gets his wings clipped. He plays a video clip with a section removed to make it seem like a contradiction when in fact it isn't:

Q. And am I correct that, in writing that, you didn't have anything specific in mind with respect to what questions were raised; is that right?

A. No. I probably did have things specific in
mind when that was written.

MR. SINGER: Okay. Let's take a look at your deposition on February 8, 2007, at page 53, line 24, to 54, 09; 55, 04 --

MR. ACKER: I'm sorry. Page 53?

MR. SINGER: Yes. 53, 24 to 54, 09. 55, 04 to 55, 05.

MR. ACKER: 53, line 24?

MR. SINGER: Yes, to 54, 09.

MR. ACKER: Yes.

MR. SINGER: Then 55, 04, to 55, 05.

MR. ACKER: Okay.

MR. SINGER: Mr. Calvin, would you play clip 4.

(Video clip played as follows:)

Q. What did you mean by saying that Amendment Number 2 raises as many questions about copyright transfers as it answers?

A. Well, it was made in the context of comments that Mr. McBride made about the effect of Amendment Number 2 on the question of copyright ownership. And it was intended to point out to the reader that it wasn't as clear as he was suggesting -- to the addressee, that it wasn't as clear as he's suggesting.

Q. And do you have anything specific in mind?

A. No, I don't.

MR. ACKER: Whoa. Whoa. Your Honor, we need to approach. (Discussion among the Court and counsel out of the
hearing of the jury.)

MR. ACKER: He's cut out a whole clip. The next section was.

"And were there questions that you had in
mind as of the time of this letter that
Amendment Number 2 raised but did not answer."

"Yes. I'm sure -- at the time, I'm sure I
had in mind questions that had been raised that
the amendment didn't answer."

He's cut that out.

MR. SINGER: I don't believe it requires --

MR. ACKER: It would have required, for purposes of completeness, that it be included.

MR. SINGER: I raised this with you before --

MR. ACKER: You made it as one single clip. That's a misrepresentation. And the next question and answer made clear that, at the time of his deposition, he had questions in mind. And you just left that out.

MR. SINGER: "Did you have anything specific in mind? "

"No, I didn't."

"Were there questions you had in mind?"

"Yes. I'm sure -- at the time, I'm sure I had in mind questions that had been raised but weren't answered."

"As you sit here, do you know what those questions are?"

"Yes. I'm having a difficult time doing that, but it, I believe --"

MR. ACKER: But you --

MR. SINGER: Let me finish.

"I'm having a difficult time doing that."

I asked him:

"Do you have anything specific in mind?"

"No, I don't."

I think that's fair use of the examination.

MR. ACKER: But you cut out the middle where he said he had questions in mind at the time. You can't do that

MR. JACOBS: Your Honor --

THE COURT: Mr. Jacobs?

MR. ACKER: But you played it as a clip as though it was one continuous question and answer. You left out the middle where he was asked and said he had questions in mind at the time. That's clearly improper. You can't do that.

MR. SINGER: I don't think there is anything improper in the use of this. I identified the specific lines I was reading. He says that, about this press release, my question to him before I used this impeachment.

"Can you identify specifically what those questions are?"

He said: "I'm sure I could."

And then I asked him: "Do you have anything specific in mind?" And he wasn't identify anything specifically at the time of his deposition.

THE COURT: All right. All right.

MR. ACKER: It's not --

THE COURT: Be quiet. If you want to right now stand up and point out that you think there was something that was left out of the clip, you may read it to the witness, all right?

MR. ACKER: Yes.

And so he does. Now what is the jury thinking about Singer? I know what I'm thinking. I'm thinking "improper" is too small a word. I'm actually shocked, not just that it could happen but that Singer, caught out, fought to make it slide on by. Wow. Just wow.

The transcript of this day is in three parts: part 1
[PDF] [Text], part 2
[PDF] [Text] and part 3
[PDF] [Text].

1789

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

THE COURT: Good morning. I'm going to give you
some rulings on some of the motions that were filed over the
weekend. First, as to the SCO motion to preclude the
testimony of DeFazio regarding the intention of the APA, the
Court will deny the motion. In reviewing the deposition
testimony, the Court believes that this is more like that
testimony that was permitted to be elicited from
Mr. Frankenberg and other witnesses who were asked questions
about the intent of the APA, and the Court permitted them.

Mr. DeFazio was clearly involved in the
negotiations, he had personal knowledge, and the questions
that were posed to him had to do with whether or not there
was a specific discussion about copyrights. As with the
other witnesses presented by the plaintiffs, apparently
there were no such discussions, and that was the type of
testimony the Court believes ought to be elicited, again,
primarily because of his personal involvement in the
negotiations of the APA.

Second, Novell's motion for leave to examine other
witnesses about prior court rulings, the Court will deny it.
The Court will find, first of all, that the relevance of the
testimony, its probative value is very slight, if there is
any, for the time frame in question. It's apparent that the

1794

time frame that matters is the year 2003 and early 2004
prior to the first ruling by Judge Kimball in June 2004.
Further, the prejudicial value is still extremely high.

The Court would note, however, that the question
of these Court rulings might be relevant to the issue of
punitive damages, specifically there ought to be a means
whereby the defendants can respond to the assertions that
were made in the opening statement that the so-called --
well, the claim to title to the copyrights exists on the
Novell Web sites to this day. Therefore, the Court will
allow a witness to be asked the question why do they remain
on the Web site. And if that witness can truthfully testify
that they are there because of the prior court rulings, the
Court will allow general reference to the court rulings, but
the Court will not allow any reading of the rulings or
anything more specific than that.

Regarding Troy Keller, there is no response from
SCO. Do you wish to say something here this morning?

MR. SINGER: Yes. This was filed late last night.

Your Honor, Mr. Keller is to be called as a
witness on the points in his declaration which reflect
communications with Wilson Sonsini when Wilson Sonsini was
representing Santa Cruz in the 2001 sale of these assets to
Caldera and to why the language, which is questioned by
Novell, states what it does and not something else.

1795

This was presented originally in May of 2007 in
opposition to a motion for summary judgment. While this is
a number of years ago, it's our best recollection this is
the first time the issues surfaced, but in that motion for
summary judgment and before that time there was no reason to
believe Mr. Keller's testimony on that point relating to a
2001 transaction would be probative. The various
disclosures were subsequently amended. There was no effort
by Novell from the May 18, 2007 filing through the summary
judgment in August of 2007 to raise this issue.

Novell notes that we did not list Mr. Keller in an
August 22, 2007 pretrial disclosure. We, in fact, dropped
him off the list, and that is quite correct, because by that
time Judge Kimball had ruled on summary judgment against us
on ownership issues, which this testimony related to, and
the trial we were looking at in September would not have
involved these issues. That's why he was, at that time,
removed.

The case goes on appeal. It comes back to Your
Honor in 2009. And in the first disclosures here we've
included him as someone who we intended to call. There has
been no effort from that point, which I think was in early
February, until now to suggest that they needed the
deposition of Mr. Keller.

Notwithstanding that, when this issue came up a

1796

week or so ago, we indicated that --

THE COURT: The one point they make is that you
did not disclose him as a witness in this trial until
subsequent to the commencement of trial, correct?

MR. SINGER: That's not quite correct, Your Honor.
We listed him in the pretrial disclosure. It is in the
order signed of witnesses.

THE COURT: But then the witness list that you
submitted to the Court did not contain --

MR. SINGER: The witness list, inadvertently, did
not contain it. That's why we said when we were going to
call him in our case back over a week ago, that we wouldn't
call him then. We would even agree to provide a deposition
of him, which we're prepared to provide for a couple of
hours this afternoon. We thought we were going to be able
to work out these issues. The stumbling block has been,
they said, well, we don't have all these Brobeck Phleger
documents regarding due diligence, which of course they
could have sought years ago if they wanted to pursue that.
Brobeck isn't around.

This is important testimony regarding things that
are not privileged with respect to his conversations with
Wilson Sonsini in 2001 and why he drafted this document.
We're prepared for him to be fully deposed on that even
though they didn't take advantage of opportunities to ask

1797

for such a deposition in an earlier point in time. But he
was disclosed prior to this trial in the joint pretrial
order and in the supplemental disclosures preceding that
pretrial order.

THE COURT: Remind me again, at what point did you
disclose that you did intend to call him as a witness in
this trial?

MR. SINGER: I know he was in a joint pretrial
order that was --

THE COURT: No, during the trial.

MR. SINGER: During the trial, we disclosed on
Thursday, I believe, that he was going to be called the
following day as a witness.

THE COURT: Thursday of last week or the week
prior?

MR. SINGER: The week prior.

THE COURT: So they have known for ten days in
this trial that he was going to be called?

MR. SINGER: Yes.

THE COURT: All right. The Court is going to
permit the testimony of Mr. Keller. If the deposition is
necessary, the Court will order that he be admitted --
access be made available for him this afternoon so that that
deposition may be taken.

MR. SINGER: Thank you.

1798

THE COURT: There is another motion filed by the
plaintiff in this case limiting Novell's trial testimony
based on privilege objections. Counsel, do you want to
respond to that in writing or do you want to deal with it
here orally this morning?

Mr. Jacobs.

MR. JACOBS: Your Honor, in discussing how to
handle this witness with Mr. Singer before court began, Mr.
Singer made it a little clearer that this was kind of a
heads-up, here are the issues that might arise during
testimony with which we understand. I would like to make a
couple of global comments about privilege and about the
material that they have submitted so that when a particular
question is asked at least you have this background.

Number one, I believe the record is clear from the
beginning that on the questions of copyright ownership and
the negotiations of the asset purchase agreement, Novell did
not assert or you could say waive subject matter privilege.
So in that -- so when you are looking at a record where
someone is saying we're asserting privilege over the APA,
that may be true as a general matter -- or as they related
to negotiations, that may be true as a general matter, but
the specific subjects at issue in this lawsuit, the
documents were produced, the witnesses testified, there were
declarations that were submitted. And so on those subjects,

1799

there should not be any disagreement. You may have to
penetrate a little bit the materials that have been provided
to understand that. From the beginning, that has been our
plan.

THE COURT: So let me make sure I understand. You
are asserting that even though during the course of the
depositions there were some general privilege objections
made, when it came to specific questions regarding the
issues in this case, the privilege was waived and the
witnesses were allowed to answer those questions in the
deposition?

MR. JACOBS: Now one of the places where there is
some conflicting evidence submitted by SCO is in the
deposition of Wilson Sonsini. This was a somewhat peculiar
deposition. It was a deposition of Wilson Sonsini as an
entity. I think at the time SCO was trying to pursue this
idea that because there is Wilson Sonsini as a firm during
the '95 negotiations and then Wilson Sonsini as a firm in
the 2001 transaction with Caldera, there is some kind of an
institutional position on the question of whether copyrights
transferred.

1800

Mr. Parnes is Wilson Sonsini's lawyer representing
Wilson Sonsini in that deposition. And the transcript --
frankly, Your Honor, because of the way that theory was
being pursued, the transcript is a bit of a mess. As we
discussed before, the team that represented Santa Cruz in
2001, 2002 was subject to an ethical wall from the team that
represented Novell in 1995. So part of what Mr. Parnes as
Wilson Sonsini's lawyer is trying to fend off in that
deposition is this very idea that the firm as an institution
has a position on the question of copyright ownership.

When he was making assertions, he was not doing so
on behalf of Novell. That was a third-party deposition of
Wilson Sonsini, the institution. So that's one additional
piece of background because some of the materials they have
submitted relate to that topic.

The third general point relates to the 2002, 2003
period. This is relevant to an upcoming -- to our first
witness, Mr. LaSala, the general counsel. The Court has
seen e-mails -- internal e-mails at Novell recounting the
contents of communications with, for example, Mr. McBride
when Mr. McBride was telephoning the Novell personnel and
raising the topic of copyright ownership. Those are
redacted because the contents of the communications we did
not assert a point of privilege over, but the advice or what
should we do in light of this call we regarded as internal

1801

legal advice. So that's what the redactions are. We've
cued to that faithfully, we believe, and it's a little late
now to be arguing over whether the redactions were
appropriate or not.

Mr. LaSala will likely testify to what he
understood the contents of the communications with Mr.
McBride were. But, again, we did not assert a claim of
privilege over those facts while we did assert a claim of
privilege over internal legal advice.

Last point, because I think that the real danger
here is not in the questions we're going to ask the
witnesses that we're going to be presenting in our case in
chief because we've had this plan in mind, if you will, for
how we were going to deal with privilege issues, I think the
bigger question comes up on cross-examination because it
could be quite easier for the witness to hear a question on
cross and think, oh, SCO is now opening the door, and to
answer this question truthfully I have to discuss what
happened internally at Novell. So it's really up to SCO, I
believe, to frame its questions carefully so that the
witness is not put in the awkward spot of understanding from
the plan how we were going to deal with privilege issues but
being asked a question that to answer truthfully requires
inquiry into privilege matters.

With that, I don't need to say anything more

1802

because, again, we think we know where we assert the
privilege and we've planned our direct examination
accordingly.

THE COURT: Thank you, Mr. Jacobs.

Let me state that the Court has now been informed
and SCO has been warned, and I will again restate generally
what the Court ruled last week in regards to the requests
made by Novell, that the Court is not going to permit
testimony to be presented to the jury that was not explored
in the deposition because of the claim of the privilege,
across the board, both sides. That's what we're going to
do.

I don't know enough about the specifics to go
beyond that in regards to the motion by SCO at this point,
but I hope we all have a little bit of a framework that we
can operate on without too much trouble during the course of
the next four days.

Mr. Brennan, do you have something?

MR. BRENNAN: Yes. Thank you. I appreciate that,
Your Honor.

I just wanted to follow up with respect to the
Court's ruling regarding prior rulings by Judge Kimball. I
don't intend to reargue it, I just wanted to raise a point
of a practicality, as I understand it.

Mr. Tibbitts, I believe, is the last witness that

1803

will be proffered today by the plaintiff before SCO begins
its case, and one of the issues, at least as we understand
it that has given rise to the request we made to the Court,
is that Mr. Tibbitts had communications with potential
licensees after the commencement of this case against
Novell, after Novell had filed its motion to dismiss which
led to the June 2004 ruling. And in those communications
the issue of the Novell litigation and the status of the
ruling on the motion to dismiss was a subject matter of
discussion between Mr. Tibbitts and these potential
licensees.

So my request, Your Honor, is in light of the
Court's ruling, in particular the framing of the operative
time period being, as I understood it, essentially prior to
the commencement of the Novell case --

THE COURT: No, it was prior to the ruling by
Judge Kimball in June of 2004.

MR. BRENNAN: Thank you, Your Honor.

With that in mind, it would seem unfair and
inappropriate to allow Mr. Tibbitts to testify to the
contact that he had with potential licensees after that
ruling.

THE COURT: After June 2004?

MR. BRENNAN: Yes.

THE COURT: The only one I'm aware of is the

1804

Department of Defense, and SCO said that they were not going
to explore that with Mr. Tibbitts.

MR. BRENNAN: I think there may be others. So
with that guideline --

THE COURT: I would agree, that anything after
June 2004 --

MR. NORMAND: There are no others. There are none
that fall into that category.

MR. BRENNAN: That makes it easier.

Thank you, Your Honor.

THE COURT: Anything else?

MR. SINGER: Your Honor, before we turn over to
Novell after Mr. Tibbitts, we would like to read in certain
paragraphs of the answer that we believe constitute
admissions. The objection that Novell raised last week was
rejected by the Court. May we be permitted to do that after
Mr. Tibbitts' testimony?

THE COURT: Mr. Jacobs, you wanted to reply?

MR. JACOBS: Two things, Your Honor. I believe
what the Court said was we would see how things unfolded
this week to see if anything needed to be revisited in that
connection.

THE COURT: That is what the Court said.

Mr. Singer, the point the Court was trying to make
is that though apparently in defendant's mind there is now

1805

some way to distinguish between UNIX and UnixWare, I don't
believe that is yet before the jury. What I was
anticipating is that during the course of their case, that
they may try to make that distinction. If they do, then I'm
going to allow you to read what you want. But you have your
case, two more witnesses, so you will have an opportunity to
do it. I would rather we do it only if it's justified. I
don't want to confuse the jury any more than is necessary by
having you out of the blue stand up and read that because I
don't think they would understand the significance of that.

MR. SINGER: We understand, Your Honor.

MR. JACOBS: The only second point is that, as Mr.
Singer acknowledged the other day, one important point of
clarification would be, as Mr. Singer proposed, to say UNIX
and UnixWare copyrights existing up to the date of the asset
purchase agreement. There has never been a claim by Novell
that we own copyrights to material created after the asset
purchase agreement by Santa Cruz or SCO.

MR. SINGER: That's not a point of dispute.

THE COURT: All right. Ms. Malley, will you
please bring the jury in.

(Jury present)

THE COURT: Good morning, ladies and gentlemen.
We hope you had a nice weekend. We have another week ahead
of us. As I said to you last week, we do appreciate the

1806

fact that you have paid attention as you have, that you have
remained alert during the course of the trial. We hope that
you will make an effort to do so during this next very
important week.

I believe, Mr. Singer, I need to ask you, or is it
Mr. Normand?

Mr. Normand.

MR. NORMAND: It's me, your Honor.

We call Ryan Tibbitts.

THE COURT: All right, Mr. Tibbitts.

RYAN TIBBITTS,

Having been duly sworn, was examined

and testified as follows:

THE CLERK: If you would please state and spell
your name for the Court.

THE WITNESS: Ryan Tibbitts. R-y-a-n,
T-i-b-b-i-t-t-s.

DIRECT EXAMINATION

BY MR. NORMAND:

Q Good morning, Mr. Tibbitts.

A Good morning.

Q Are you currently employed?

A I am.

Q Where?

A At The SCO Group, Inc.

1807

Q When did you start at SCO?

A The last week of May 2003.

Q Could you briefly describe your educational background?

A After I graduated from high school, over the course of
the few years I attended a junior college in Idaho, Ricks
College. Graduated from there. Then I attended Brigham
Young University in Provo, received a business degree from
there, and then also a law degree from BYU.

Q What did you do after law school?

A The first year out of law school I clerked for a
judge -- that's just working for a state judge on various
matters before that court -- for a year. Then I joined a
large Salt Lake City law firm.

Q How long were you at the law firm?

A Just short of 16 years.

Q Did you serve in any management positions at the law
firm?

A I did. I think the last eight or nine years I was
there, I was on the board of directors. And then the last
six years I was there, I was the president of the firm.

Q What did you do after you left the firm?

A I left the firm to join a technology company called
Lineo, as general counsel. Was there for about a year.
Then I joined a second technology company named Center 7, as
general counsel. And then I joined The SCO Group. So I'm

1808

on to my third technology company.

Q Were you with SCO when Novell asserted in May 2003 that
SCO does not own the copyrights at issue here?

A Yes. I had been there just a few days when that
happened.

Q Do you generally recall the reaction from the
community?

A Yeah. I think I was so new to the game at that point
in the company, the significance was maybe lost on me a
little bit. But I can say within the company, you know, a
cross between absolute astonishment and total crisis mode
for what it was doing to the company.

Q Now on the issue of copyrights, what happened next?

A Well, the next thing I recall was a few days later a
secretary there at the company found the file with what
we've referred to as Amendment No. 2 in the file. Our CEO,
Darl McBride, faxed that off to Novell's CEO, Jack Messman.
There were some phone conversations and letters that went
back and forth. And then on June 6th, Novell issued a press
release retracting what they had previously said about
copyright ownership.

MR. NORMAND: Mr. Calvin, would you pull up
Exhibit 97.

BY MR. NORMAND:

Q Mr. Tibbitts, is this the press release you were

1809

referring to?

A Yes, it is.

Q Was there particular language you were referring to in
the answer you just gave?

A Yes. I think it's the last sentence of the first
paragraph where it says, the amendment appears to support
SCO's claim that ownership of certain copyrights for UNIX
did transfer to SCO in 1996.

Q Did you rely on this press release in deciding that SCO
owns the copyrights at issue here?

A Yes. I think we clearly looked at the press release,
that Novell is a public company that's issued worldwide, and
then the events that led up to that, including the
conversations that Mr. McBride had with Mr. Messman and the
letters that had gone back and forth up to that point.

Q Did SCO and Novell exchange correspondence about
copyrights over the next many months?

A Yes, we did.

Q Did that correspondence change your mind about whether
SCO had acquired the copyrights at issue in this case?

A No, it did not.

MR. NORMAND: Mr. Calvin, would you pull up
Exhibit 109.

BY MR. NORMAND:

Q Do you recognize this document, Mr. Tibbitts?

1810

A Yes. This is a letter from September of '03 that I
sent on behalf of SCO to Joseph LaSala, who was Novell's
general counsel at the time.

MR. NORMAND: Your Honor, I would move the
document into evidence.

MR. BRENNAN: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 109 was received into
evidence.)

THE COURT: This is 109, correct?

MR. NORMAND: That's right, Your Honor.

BY MR. NORMAND:

Q So now that the jury can see the document, Mr.
Tibbitts, what is the date again?

A Pardon me?

Q What is the date of the document?

A September 10th, 2003.

MR. NORMAND: Mr. Calvin, would you pull up the
middle paragraph beginning we have reviewed.

BY MR. NORMAND:

Q Can you see that language, Mr. Tibbitts?

A I do.

Q Did this language reflect your views at the time?

A Yes. We were responding to a couple of letters as
referenced in the first paragraph that they had sent us, so

1811

this was in response to several letters. We just conclude,
we respectfully suggest that you carefully review all of the
agreements in their entirety, and particularly Amendment No.
2.

Q Why did you call out Amendment No. 2?

A Well, because we believed, just as Novell had stated in
their press release, that Amendment 2 cleared up the issue
and confirmed that the copyrights had transferred many years
before. We thought that was the end of the issue.

Q When you refer in the sentence to all the agreements,
were there other documents that SCO relied on in forming the
view reflected in this letter?

A Yes.

Q Do you recall reviewing the technology license
agreement in 2003?

A We did.

Q Did you rely on that agreement?

A Yes, we did.

Q Do you recall relying on any other documents for the
views reflected in this letter?

A Yes. All during this period of time, we were gathering
the documents on this issue because Novell had sent a couple
of additional letters. So, of course, we looked at the
asset purchase agreement itself, both of the amendments,
including Amendment No. 2. We looked at the technology

1812

license agreement. And then in various time frames other
documents came to light, including the joint press release
that Novell and SCO had issued at the time alerting the
world that the intellectual property had transferred to
Santa Cruz as part of this transaction.
There were letters that came to light somewhere in this
time frame that Novell had sent to their customers around
the world.

Q When did Novell send those letters?

A Within a couple months after the closing date. All
went out at different times.
There was an SEC filing by Santa Cruz from -- I believe
late '95, shortly after the deal closed, where they
indicated that they had acquired the core intellectual
property to the UNIX operating system, which anyone who
understands source code and software, the core intellectual
property would be the copyrights. Then there was, you know,
other types of evidence that was coming in or statements
about SCO being the copyright owner, including statements
relating to SuSE, the company Novell announced it was going
to acquire, and those sorts of documents.

MR. NORMAND: Mr. Calvin, could you pull up C-14.
If you could pull up that paragraph beginning so far.

BY MR. NORMAND:

Q Is this the SuSE document that you were just referring

1813

to, Mr. Tibbitts?

A Yes.

Q Was there particular language in this paragraph that
you had in mind?

A Yes. Third line up it says, SCO, which owns the
copyright to UNIX. This was part of a story on InfoWorld
that had come out relating to SuSE Linux, which was one of
the largest Linux companies in the world. At this time I
believe IBM was a majority owner of SuSE. Many IBM
executives were involved with SuSE. And SuSE, during this
time frame when they were talking about this UnitedLinux
organization, had requested that SCO donate the UNIX
technology and copyrights to SuSE and to the UnitedLinux
organization. And, you know, that was further evidence on
what the world understood and what people that were very
heavily involved in this space understood about who owned
the copyrights in the business.

Q Now you mentioned IBM. When you joined SCO, was SCO in
litigation against IBM?

A Yes, we were.

Q What were the principal claims SCO had brought against
IBM, if you recall?

A Well, the principal claim was essentially a breach of
contract claim that related to SCO's allegations. SCO was
the owner of all of those UNIX licenses under which other

1814

companies had developed their own flavor of UNIX, IBM being
one of those. Their UNIX derived flavor was known as AIX.
IBM had announced publicly to the world that they were going
to donate all of AIX, if the Linux community wanted it, to
Linux. We believed that was a very clear breach of their
license agreement and would be devastating to our UNIX
business, which is in the same market space as Linux. And
so we sued them for breach of that license agreement.

Q Did Novell direct SCO to waive its contract claims
against IBM?

A Yes.

Q Were you involved in the correspondence on that issue?

A Some of it. There were some letters earlier on, I
believe, between Novell and our CEO, Mr. McBride. And then,
as I say, I kind of moved into SCO in mid 2003. And so when
they made some demands later on about asking us to waive
certain claims against IBM, then I got involved at that
juncture.

MR. NORMAND: Mr. Calvin, could you pull up SCO
243.

BY MR. NORMAND:

Q Do you recognize this document, Mr. Tibbitts?

A Yes, I do.

Q What is the document?

A This is a letter to me from Mr. LaSala of Novell.

1815

There is not a date on the front page, but I believe if we
look at the headers on the second pages, it's October of
2003.

MR. NORMAND: Your Honor, I move SCO 243 into
evidence.

THE COURT: It's already been admitted.

MR. NORMAND: Can we go to the last page, Mr.
Calvin, and bring out those two paragraphs, if you would.

BY MR. NORMAND:

Q Mr. Tibbitts, what did you understand Mr. LaSala to be
saying in this portion of the letter in particular?

MR. BRENNAN: Objection, Your Honor. In that
regard it speaks for itself.

4.16(b) of the asset purchase agreement, Novell
hereby directs SCO to waive any purported rights SCO may
claim to require IBM to treat IBM code itself as subject to
the confidentiality obligations or use restrictions of the
agreements. Novell directs SCO to take this action by noon,
MST, on October the 10th, 2003, and to notify Novell that it
has done so by that time.

BY MR. NORMAND:

Q Do you recall whether SCO complied with this directive?

A No, we did not.

Q Do you see at the bottom the cc?

MR. NORMAND: If you could bring that out, Mr.
Calvin.

BY MR. NORMAND:

Q Do you know who Mr. Ron Lauderdale was at that time?

A Yeah, by this time I knew who he was. He was an
assistant general counsel in IBM's legal department.

Q Did it concern you that IBM was copied on this letter
to you from Novell?

A Yes. They had copied them on some prior correspondence
as well, and obviously that caused us some concern. You

1817

know, if companies like IBM and Novell are lined up against
you, that's a serious matter. And, you know, our choice was
do we -- do we stand up for our rights and fight for our
customers and our shareholders or do we just, you know, let
them run over us. We decided we had to stand up to them.

Q Mr. Tibbitts, let me show you SCO Exhibit 110. Do you
recognize this document?

A Yes. This is a letter that I sent to Mr. LaSala on
October the 9th, 2003. So I think this is responding to the
letter that we just looked at.

MR. NORMAND: Your Honor, I don't believe SCO 110
is in evidence. I would move it in.

MR. BRENNAN: Your Honor, this letter was the
subject of discussion in court on Friday regarding certain
redactions. I don't see those redactions appearing in the
letter, contrary to your agreement.

MR. NORMAND: I have a hard copy of the
redactions.

This is the redacted version now on the screen, so
the jury hasn't seen it.

THE COURT: Let Mr. Brennan see the redacted
version and make certain he's comfortable with what has been
redacted.

MR. BRENNAN: May I just inquire of counsel to see
the unredacted version so I can make the comparison?

1818

THE COURT: Yes, certainly.

MR. BRENNAN: Thank you, Your Honor. I appreciate
that.

THE COURT: So as redacted --

MR. BRENNAN: No objection, Your Honor.

THE COURT: Thank you.

(Plaintiff's Exhibit 110 was received into
evidence.)

BY MR. NORMAND:

Q So, Mr. Tibbitts, I believe you were saying this was
your letter in response to Mr. LaSala, the letter from Mr.
LaSala that we've just reviewed; is that right?

A Yes.

Q Now let's pull out the second paragraph. Could you
read the second to last and the last sentences of this
paragraph?

A Starting with you claim?

Q Yes.

A You claim that any result other than your selective
interpretation of the agreements would defy logic. We
submit that your position that SCO received basically
nothing for the many millions it paid Novell or that Novell
has the unfettered right to simply declare that all SCO
license rights have been waived defies logic.

Q And why did you use the phrase defies logic?

1819

A Well, that was their term. They said our position
defied logic. And just by looking at the evidence that we
had and our understanding, we thought, you know, their claim
that they had literally the right to destroy our business
and waive all our license protections against everybody
defied logic.

Q Mr. Tibbitts, let's show you SCO Exhibit 691. Do you
recognize this document?

A Yes. This is a letter from October 10th, 2003
addressed to me and Ron Lauderdale from Mr. LaSala at
Novell.

MR. NORMAND: Your Honor, I move SCO 691 into
evidence.

MR. BRENNAN: No objection.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 691 was received into
evidence.)

BY MR. NORMAND:

Q Now again, Mr. Tibbitts, IBM is copied on this letter.
So you recall reacting to that issue?

A Well, they weren't just copied on it. It was sent to
them as well. And along the lines that I've said before, it
was of great concern to us that two companies like IBM and
Novell locking arms to try and waive all your rights of your
business, and, you know, we viewed it as essentially an

1820

effort to shut us down. So this was their follow-up letter.
Because we didn't comply with their order to waive our
claims against IBM, they were purporting to waive those
rights on our behalf.

MR. NORMAND: Mr. Calvin, let's go to the second
page of this document and bring out those two paragraphs.

BY MR. NORMAND:

Q Is this the language you were referring to, Mr.
Tibbitts?

A Yes.

Q So by this point you had not complied with their
directive from a few days earlier?

A No, we had not.

Q Have you ever complied with that directive?

A No.

MR. NORMAND: Let's look at SCO 108, Mr. Calvin.

BY MR. NORMAND:

Q Do you recognize this document, Mr. Tibbitts?

A Yes. This is another letter from a few months later to
me from Mr. LaSala at Novell.

MR. NORMAND: Your Honor, I move SCO 108 into
evidence.

MR. BRENNAN: No objection, Your Honor.

THE COURT: It will be admitted.

(Plaintiff's Exhibit 108 was received into

1821

evidence.)

MR. NORMAND: The jury can now see the front page
of the document.

BY MR. NORMAND:

Q The subject line says, Sequent Computer Systems. Could
you briefly describe what that refers to?

A Yes. This is a little tricky, so I hope I can explain
it well. Sequent Computer Systems was another one of these
UNIX licensees that had taken a license to make their own
flavor or version of UNIX. So they had a UNIX derived
version.
Sequent was purchased by IBM in the late '90s. So at
this time Sequent was actually part of IBM, but it was a
different license agreement than the IBM license agreement.
And IBM had started donating technology from Sequent's
version of UNIX, their UNIX flavor, and they were donating
portions of that operating system into Linux which would
allow Linux to run enterprise servers. So it was directly
competing with us at that point. So we had also terminated
Sequent's license and said that they were in breach and no
longer authorized to use that code, even though it was at
that point owned by IBM.
So it was a little complicated, but we felt the need
that we had to terminate that license too because IBM was
doing the same thing with Sequent Computer System as they

1822

were doing with their own UNIX flavor.

MR. NORMAND: Mr. Calvin, let's go to the second
page of the document and bring out the last two paragraphs.

BY MR. NORMAND:

Q Mr. Tibbitts, could you just read that first paragraph
into the record.

A Accordingly, pursuant to section 4.16(b) of the asset
purchase agreement, Novell hereby directs SCO to waive any
purported right SCO may claim to require Sequent, or IBM as
its successor, to treat Sequent code as subject to the
confidentiality obligations or use restrictions of Sequent's
SVRX license. Novell directs SCO to take these actions by
noon, MDT, February 11th, 2004, and to notify Novell that it
has done so by that time.

Q Did SCO comply with this directive?

A No, we did not. It was another three days that they
had given us to comply with this directive, and we did not.

Q Let's look at the last document in this series, Mr.
Tibbitts, SCO Exhibit 500. Do you recognize this document,
Mr. Tibbitts?

A Yes. This is another letter to me from Mr. LaSala --
actually the letter is to me and to Mr. Lauderdale of IBM.
This is following up their other letter where they said
because we didn't comply with their order, that they were
going to just do it on their own.

1823

MR. BRENNAN: Objection, Your Honor, I move to
strike that. The letter speaks for itself. The witness is
characterizing it. The document itself is in evidence.

THE COURT: I will sustain the objection and
strike the answer that Mr. Tibbitts just gave.

Q Mr. Tibbitts, how does this letter relate to the letter
we just looked at?

A As I said, this is a follow-up letter regarding Sequent
Computer Systems. Because we did not comply with their
previous order, they were taking that action on their own.

Q Let's look at the second page of the document.

MR. NORMAND: Mr. Calvin, if you would bring out
the last two paragraphs.

BY MR. NORMAND:

Q Could you read that language into the record, Mr.
Tibbitts?

A SCO has failed to take the actions directed by Novell.

1824

Accordingly, pursuant to section 4.16(b) of the asset
purchase agreement, Novell, on behalf of The SCO Group,
hereby waives any purported right SCO may claim to require
Sequent, or IBM as its successor, to treat Sequent code as
subject to the confidentiality obligations or use
restrictions of Sequent's SVRX license.

Q So in this letter Novell was actually claiming to be
acting on behalf of The SCO Group; is that right?

MR. BRENNAN: Objection, Your Honor, leading the
witness.

THE COURT: Sustained.

MR. NORMAND: Summarizing his testimony.

MR. BRENNAN: I object to that. He ought to offer
his own testimony.

BY MR. NORMAND:

Q When you received this letter, Mr. Tibbitts, what did
you understand this language on behalf of The SCO Group to
signify?

A That Novell was purporting to waive our rights under
the license agreements that we owned relative to Sequent
slash IBM.

Q Let's move to a different topic, Mr. Tibbitts, the
SCOsource program. Did you have any involvement with the
SCOsource program?

A Yes. When I joined the company, the IBM litigation was

1825

under the broad umbrella of the SCOsource division of SCO,
so I got involved over time with that lawsuit. And then I
also got involved in a few efforts to meet with customers
and sell the SCOsource licenses it had developed.

Q What was your first direct involvement in the SCOsource
program?

A My first involvement was the first part of August 2003
where we had -- where we obtained a license from one of the
largest computer technology companies in the world, Computer
Associates.

Q Could you explain how that works.

A I hope so. It's another bit of a story. But my prior
employer, before I joined SCO, had been involved in a
dispute with Computer Associates over an unrelated contract.
There came a time when those parties decided they wanted to
resolve that dispute. So we negotiated a settlement of
that.
At the last minute, after we thought we had everything
put to bed, the person who was mediating that dispute for us
came in and said, Computer Associates wants one other thing.
We said, what's that. They said, well, they understand,
Ryan, that you are now working for The SCO Group and they
want some kind of a license from SCO to make sure they are
okay with SCO's IP as it relates to Linux. This obviously
surprised all of us because we were dealing with totally

1826

different issues. I said, well, I just started to work for
SCO, that's true, but I don't have a position to grant you
some kind of a license. I will certainly get you in touch
with people at SCO who can talk to you about that. And so
we proceeded in that fashion.
A few days later Computer Associates gave us a list of
the things they wanted. We negotiated back and forth. And
ultimately, in early August, Computer Associates signed what
I think was our first license that became -- I don't know if
it was known at that point as the RTU, or right to use
license that we've talked about, but that was the first
license that went into that category, I believe.

Q And, in summary, why was that discussion significant to
you?

A Well, because I knew CA was one of the -- I think it
was a Fortune 500 company, one of the largest technology
companies in the world, and they came to us and demanded
that SCO provide some kind of a license to them. And they
were willing to hang up this other deal they had been
working on for years to get resolve over this point. So it
told me it was a serious matter and that big companies out
there were interested in this.

Q What did you say happened with respect to Computer
Associates on this issue of a potential license?

A They signed a license agreement.

1827

Q Now with respect to the SCOsource program, what did you
understand SCO's target market to be?

A Corporate users. They wanted businesses that were
using Linux in their enterprise server environment as
opposed to individuals or people that were using Linux as a
hobby tool on their personal computers. That was not the
target at all.

Q In connection with this SCOsource program, was the
company collecting evidence that Linux was infringing on
SCO's rights?

A Yes.

Q If you can recall it this way, what materials do you
recall having organized by mid 2003 say?

A Well, there were several different categories I
believe. This all started with a person within our company
who was basically in charge of our Linux marketing, when he
informed management that he understood that people in the
marketplace were using our SCO UNIX libraries to migrate
their systems to Linux. He viewed that as --

MR. NORMAND: We were speaking to the issue of Mr.
Tibbitts' understanding of what materials had been collected
by SCO.

1828

MR. BRENNAN: But that's not what the answer had
been. We haven't heard what materials have been collected.
We've been hearing what someone else at SCO identified.

THE COURT: Mr. Tibbitts, you know what hearsay
is. Would you please try to testify avoiding hearsay.

Let's start over.

THE WITNESS: We gathered information about SCO's
UNIX libraries that people were using to migrate their
systems over to Linux away from UNIX. That was the first
thing that we came up with.

There were -- I think the next thing was an e-mail
from a gentleman who had a Linux company. I'm afraid I'll
probably butcher his name, but it's Miguel de Icaza I
believe. He had a company called Ximian that was working in
the Linux space. Sometime in early 2003, he had sent an
e-mail to the company asking SCO if it would consider
donating technology that is called ELF -- or some components
of ELF into the Linux open source community.

ELF is a very critical technology, which I'm not
qualified to explain, about the reasons that Linux moved
from being an operating system that individuals could mess
around with to an enterprise grade server operating system
that people like IBM would use. So here's this gentleman
who was --

MR. BRENNAN: Your Honor, I'm sorry. The question

1829

that was asked is what materials were gathered. We've
strayed beyond that.

MR. NORMAND: This is exposition as to how these
materials were gathered and the basis for gathering. We can
ask a series of six questions rather than one to get there.

MR. BRENNAN: The question was what materials were
gathered.

THE COURT: Because this is direct, I want you to
be more specific in your questions, Mr. Normand.

THE WITNESS: On that point, the information we
gathered was an e-mail from this gentleman, who was well
aware of Linux and the open source movement, asking us to
donate portions of ELF technology into that movement.

BY MR. NORMAND:

Q Have you heard the phrase code room?

A I have.

Q Does SCO have a code room?

A Yes. By late summer of 2003, SCO set up a room there
at our headquarters that had agreements and some television
screens where people could come in and view some code
comparisons that showed, you know, various files of UNIX
code that had been copied almost verbatim into Linux.

Q Can you provide any examples of code, as you recall,
that were copied verbatim?

A I think the first example that someone found in

1830

April or May of 2003 was some code called the Malloc code.
And, again, I don't understand the technology enough to
explain it, but it was UNIX code that was donated by a
company called Silicon Graphics into a version of Linux.
And I'm not sure who discovered it or how, but you could put
those two different code comparisons up on the screen and
highlight in red many, many lines of that code was directly
copied into Linux. So that was one example that people
could see when they visited our code room.

Q Now were SCO's salespeople allowed to show potential
customers this kind of proof that you've been describing
when you met with them?

A Not down to that level, no.

Q Why not?

A We didn't want salespeople out there running around
disclosing code to people that we have no control over them
or who they were. The salespeople did have bullet points
that they would show identifying the categories, but we did
not give them all of the specifics of the various claims
that were in the IBM case or were involved with Linux in
general.

Q Did people from outside the company come to visit the
code room?

A Yes. There were a number of people that came in and
viewed that code, and I attended some of those meetings.

1831

Q Did you have occasion to see how people reacted?

A Yeah, they were impressed with it. It's pretty glaring
when you take a look at that.

Q Do you recall attending SCO Forum in the summer of
2003?

A I did not attend SCO Forum.

Q During this time, 2003, 2004, did SCO have other
support for its claim that Linux was infringing SCO's
copyrights? Did they present this support in presentation
materials?

A Yes, we did. I do know at SCO Forum in 2003, some
people in our company did show those examples to the people
attending the forum. And we continued to gather more
evidence. There were people saying, you know, show us how
we're in violation.

MR. BRENNAN: Objection, Your Honor. We're at
hearsay again. The witness said he wasn't at the show, and
he told hearsay answers.

MR. NORMAND: Mr. Calvin, I'm looking at the slide
that ends in the Bates number 69.
//

1832

BY MR. NORMAND:

Q Do you recognize this slide, Mr. Tibbitts?

A Yes. This was one of the slides that was in various
presentations that we showed to people who were interested
in finding out what we were talking about.

MR. NORMAND: Your Honor, I move to admit this
slide within SCO Exhibit 748. I don't move to admit the
whole exhibit.

THE COURT: SCO 748 has already been admitted.

MR. NORMAND: Thank you, Your Honor. I thought
there was only one slide from 748.

MR. BRENNAN: I think that's right, Your Honor,
there is only a portion, and we do object to this as
hearsay.

THE COURT: Let me see what page you are looking
at. What page was it again?

MR. BRENNAN: What page number is this?

Your Honor, we believe, if I can read the fine
print, what was permitted was Bates number 72. It's
entitled comments from the industry analyst. As I recall,
the reason this was permitted was these were comments from
outsiders, not SCO, and that's different than what is before
the Court that's been proffered. Page 69 is pure hearsay.

MR. NORMAND: It's not being submitted for the
truth of the matter, Your Honor. It's being submitted to

1833

show what materials Mr. Tibbitts would show to potential
customers and others in the marketplace at the time.

MR. BRENNAN: Object to relevance. It's still
hearsay.

MR. NORMAND: It's an issue that Novell has raised
throughout the trial, Your Honor.

THE COURT: Counsel, the Court is going to sustain
the objection for the same reason I believe that this was
denied when it was offered previously, except for that one
page. It is hearsay.

MR. NORMAND: Okay. I thought it was because
there was a foundation problem with Mr. McBride because he
had not -- he acknowledged that he hadn't presented this
material to anybody.

MR. BRENNAN: Your Honor, it was hearsay. That
was the reason, quite clearly.

MR. NORMAND: If we could have a stipulation that
Novell was not raising in the trial the question what
materials were presented to potential customers, then I
would be happy with that.

MR. BRENNAN: Well, Your Honor, I think the issue
remains to be seen what we might use for impeachment
purposes, but we're not there yet. We're on this document
given the proffered reason at this juncture.

MR. NORMAND: There is a Novell claim in this case

1834

raising the issue of state of mind.

But I will move on, Your Honor.

THE COURT: There is no reason why you cannot ask
questions about the information without the document being
admitted.

MR. NORMAND: Agreed.

THE COURT: Assuming that a proper foundation is
laid.

MR. NORMAND: Thank you, Your Honor.

BY MR. NORMAND:

Q Mr. Tibbitts, do you recall addressing the issue of SMP
in the marketplace?

A Yes.

Q Could you briefly describe what you understand SMP to
be and what its significance is?

A Well, I don't have a very deep understanding, but SMP
is symmetrical multiprocessing, which is one of the
technologies that was donated into Linux from people who had
license restrictions on that, and that was one of the
technologies we discussed with people who wanted to hear
more about what we were claiming.

Q Let me show you, Mr. Tibbitts, what has been marked as
R-23. Do you recognize this document?

A I do.

MR. NORMAND: If you would go to the last page,

1835

Mr. Calvin.

BY MR. NORMAND:

Q Is that your signature line, Mr. Tibbitts?

A Yes.

Q Do you recall sending this letter out to Linux users?

A Well, it wasn't just Linux users, I don't think. I
mean, as a group it was sent out to corporate -- potential
corporate users, many of them -- I think maybe as many as a
thousand companies, again, just showing some of the things
that we were finding along the way that we alleged was a
problem for Linux. And so this is a letter outlining ABI
code, which is application binary interface, that links the
operating system with applications, critical technologies
that we believed prove that Linux was using our stuff
without our permission.

MR. NORMAND: Your Honor, we move Novell Exhibit
R-23 into evidence.

MR. BRENNAN: Your Honor, we do object for several
reasons. First of all, this is hearsay. Second of all,
it's not an executed copy of a letter. There is no evidence
on the face of it that it was sent to any particular person
or company, and there has not been a demonstration that that
particular communication was sent to any particular company.

Given all those reasons, it should not be
admitted.

1836

THE COURT: The Court will admit the document.

(Defendant's Exhibit R-23 was received into
evidence.)

BY MR. NORMAND:

Q Mr. Tibbitts, the jury, I think, can now see this
document.

MR. NORMAND: Mr. Calvin, if you highlight the
bottom part of this letter.

BY MR. NORMAND:

Q Again, Mr. Tibbitts, to your understanding, what is it
that is being addressed in this part of the letter and the
remainder of the letter regarding what I will refer to here
as Linux files?

A Well, I think the best I can do is just read what it
says. It says, any part of any Linux file that includes the
copyrighted binary interface code must be removed. Files in
Linux version 2.4.21 and other versions that incorporate the
copyrighted binary interfaces include, and the list goes on
for a couple of pages, if I recall. And, again, this is
just code that our consultants looked at and reviewed and
determined this was a problem. People were asking for
information, so we shared this with many companies.

Q Mr. Tibbitts, let me show you a slide from what has
been marked as SCO Exhibit 575.

MR. NORMAND: Mr. Calvin, I'm thinking of a slide

1837

that says what makes Linux different.

BY MR. NORMAND:

Q Do you recognize this slide, Mr. Tibbitts?

A I do.

Q On what basis do you recognize it?

A Well, this was a slide presentation that came in
several forms, one of which we just simply pulled off the
Internet somewhere in the 2003, 2004 time frame. It's a
slide presentation by Dan Frye, who is an IBM executive that
runs their whole Linux technology center. It's a marketing
piece --

Q Let me stop you there because we may run into this same
issue from a few minutes ago.
What was the relevance of the slide to you?

A Well, this is one thing that we also showed people when
they wanted to know what kind of things we were talking
about, and this is a document that I personally showed to
many people over the course of time.

MR. NORMAND: Your Honor, at least as a proffer, I
would move this slide into evidence.

MR. BRENNAN: Objection, Your Honor, it suffers
from the same problem before. First of all, there's not
been a proper foundation laid as to its source of origin.
This witness has not indicated that he himself did the pull
off the Internet. He hasn't laid the foundation for that.

1838

It is hearsay on two levels.

MR. NORMAND: Your Honor, again, it falls into
this category of materials that Mr. Tibbitts was showing in
the marketplace, and for the reasons that I have stated
before, I think it's relevant.

THE COURT: There is no proper foundation for it,
but I think it could be -- it could avoid hearsay because I
don't believe you're offering it for the truth, but I don't
believe there's been a proper foundation.

BY MR. NORMAND:

Q Mr. Tibbitts, do you recall how it was that you came to
have possession of this document -- this slide?

A Yes. A person who worked for SCO one day told me, look
what I found on the Internet.

MR. BRENNAN: Objection, Your Honor, that's
hearsay.

MR. NORMAND: It's not going in for the truth of
the matter, Your Honor.

THE COURT: Overruled.

THE WITNESS: So he went to a link on the Web site
where this IBM document was, and we flipped through it. I
said, yes, this is very interesting, I would like a copy of
that. And it remained on the Internet. You could get it
until not long ago. We put some of these slides up on our
Web site, and shortly thereafter it disappeared.

1839

BY MR. NORMAND:

Q Did you have occasion to see the color version of this
slide on the Internet within the last several days?

A Yes.

MR. NORMAND: Your Honor, I submit that's proper
foundation.

MR. BRENNAN: That is not an adequate foundation,
Your Honor, for a document pulled off the Internet.

THE COURT: I'll overrule the objection.

BY MR. NORMAND:

Q So the jury can now see this document, Mr. Tibbitts.
What is the particular language of the document that you
regard as significant in the course of your presenting it to
the marketplace?

A Several things. I would start with the logo down in
the bottom right that says IBM, for International Business
Machines, with a penguin next to it, which is the Linux
logo, or mascot, if you will. Then at the top the heading
is what makes Linux different. There are several things
identified there. In the center it says Linux attributes.
And then immediately to the left there it says derived from
UNIX.

Q Why did you think that phrasing was relevant?

A Well, that's significant because it's an admission that
that is exactly where Linux came from. It started with UNIX

1840

and was derived from UNIX. And, you know, I'm not saying
this is the beginning -- or the end of the issue, but it's a
good starting place when IBM admits that Linux is derived
from UNIX.

Q Let me show you the next slide, Mr. Tibbitts.

THE COURT: The whole document has not been
admitted. Only one slide at a time.

MR. NORMAND: That's right, Your Honor. I don't
think the jury can see the next slide.

BY MR. NORMAND:

Q Do you recognize this slide, Mr. Tibbitts?

A I do.

Q Does this fall into the same category as the slide we
just looked at in terms of the use you made of it and the
significance you attributed to it?

A Yes, it's part of these presentations that we pulled
off the Internet from IBM.

Q Is this a slide that you've seen the color version in
the last few days on the Internet?

A It's also a slide that we've shown to potential
customers and others who were interested in the issue.

MR. NORMAND: Your Honor, I move this slide into
evidence.

MR. BRENNAN: Your Honor, the same objection. In
fact, what we saw was a suggestion in connection with the

1841

previous one that it wasn't being offered for the truth of
the matter asserted. May I suggest it was somehow an
admission. Your Honor, so the first one was misused and now
I suggest the same may be tried with this one. We still
haven't met the evidentiary requirements for its admission.

THE COURT: I will overrule the objection. Let's
make certain the Bates numbers of these are made available
so Ms. Malley and I will know exactly which portion of 575
has been admitted.

MR. NORMAND: Yes, Your Honor. It's Bates number
ending 200.

(Plaintiff's Exhibit 575, slide 200, was received
into evidence.)

BY MR. NORMAND:

Q Was there any particular language in this slide, Mr.
Tibbitts, that you found significant at the time you were
making use of it?

A Yes. Again, it's an IBM presentation, IBM's logo and
penguin, the question why does Linux work. And then the
first bullet I guess is somebody's attempt to be humorous,
maybe, I don't know, it says, UNIX was a pre-write of Linux.

A Again, I think this is a different way of saying that
Linux is derived from UNIX, but they say UNIX was a
pre-write, like UNIX was written just so Linux could be
derived from it or something. But, anyway, it's clearly
making the same point.

MR. BRENNAN: Objection, move to strike.

THE COURT: I'm going to grant the motion to
strike because I think he's speculating about as to what it
says and what it means. So the Court will instruct the jury
to disregard the answers given by Mr. Tibbitts.

BY MR. NORMAND:

Q Do you recall having any discussions with anyone who
was reviewing the slide with you about what that language
meant?

MR. BRENNAN: Because we don't know who he's
speaking with. That's the problem.

THE COURT: I would agree.
//

1843

BY MR. NORMAND:

Q Who did you discuss --

A Well, it says what it says.

Q Do you recall discussing this language with anyone in
particular apart from your attorneys?

A Yes. I think I discussed this with a gentleman who
pointed it out to me on the Internet. His name is Dean
Zimmerman.

Q What do you recall discussing with Mr. Zimmerman about
the language?

MR. BRENNAN: Objection, that's hearsay, Your
Honor.

MR. NORMAND: It's going to Mr. Tibbitts' state of
mind not to the truth of what Mr. Zimmerman stated.

MR. BRENNAN: I'm not sure what relevance that
has, but it's still hearsay.

THE COURT: I will overrule the objection.

THE WITNESS: Well, the discussion was that this
was, in our view, another way of saying that Linux is
derived from UNIX. But it was, again, a different way of
saying that by indicating that UNIX was written for Linux.

MR. BRENNAN: Your Honor, I move to strike.
Again, that's speculation. Now we have Mr. Tibbitts
engaging in speculation with somebody else.

MR. NORMAND: Your Honor, it was a description of

1844

his discussion with Mr. Zimmerman.

MR. BRENNAN: But the description is what they
were speculating over, Your Honor.

THE COURT: I will strike the answer and ask the
question be asked again. If you will simply, without
speculating as to what the individual thought, just tell us
what he said.

Go ahead, Mr. Tibbitts.

THE WITNESS: Okay. Well, what he said is it
looked like it was another way of saying the same thing that
was on the other slide, that Linux was derived from UNIX.

BY MR. NORMAND:

Q Now, Mr. Tibbitts, in connection with the SCOsource
program, did you meet with a company called Questar?

A I did.

Q Do you recall when you met with them?

A Late 2003.

Q What was the tone of the meeting?

A It was a cordial business meeting.

Q Do you recall whether Questar entered into a license
with SCO?

A Yes, they did. A few weeks after our meeting -- within
a few weeks after our meeting, they entered into a SCOsource
license.

Q Mr. Tibbitts, do you have a view as to whether

1845

ownership of the UNIX and UnixWare copyrights is required
for SCO to run its UNIX related business?

A I do.

Q What is your view?

A The copyrights are critical for us to run the business
that was purchased from Novell in '95, both the SCOsource
business and the right to protect that core UNIX
intellectual property, and then the products businesses that
emanate off of that, to continue to develop and maximize
that business opportunity.

Q Couldn't SCO run its UNIX business by just owning the
UnixWare copyrights?

A Not our current business, no.

Q Why not?

A Because we own the core UNIX intellectual property and
a very critical component of that at this point in time is
to protect that IP, and we have got to have that IP to keep
other people from encroaching into our marketplace.

Q Mr. Tibbitts, what kind of business would SCO have been
left with without these copyrights?

A Well, as I said, we could not fully develop that core
intellectual property. We could not protect it. And this
venerable UNIX business that has been around for many years
that many customers around the world are using would simply
die off, and we have got to have that intellectual property

1846

to protect those crown jewels.

MR. NORMAND: No further questions, Your Honor.

THE COURT: Mr. Brennan.

MR. BRENNAN: Thank you, Your Honor.

CROSS-EXAMINATION

BY MR. BRENNAN:

Q Good morning, Mr. Tibbitts. How are you today?

A I'm doing fine. How are you?

Q Good.
I think you told us that you joined SCO in May of 2003,
correct?

A Yes.

Q And since you have joined SCO, you have been awarded
either shares in the company or options to acquire shares,
correct?

A Well, when you say awarded, I've been awarded options I
guess. I am not sure -- I don't remember being awarded
shares, but maybe you will prove me wrong.

Q Well, do you currently own shares of stock in SCO?

A Yes.

Q How many do you own?

A I don't know.

Q Any idea?

A Ownership I would think is in the few thousand shares
that I purchased through the employee stock purchase plan, I

1847

believe.

Q If you were to combine the shares that you actually own
and those that you have options to acquire, those would
aggregate to over 420,000 shares, correct?

A Yes, I believe that's correct.

Q So as you sit here today, you understand that if SCO
were to prevail in this litigation, that you would stand
personally to gain, correct?

A Correct.

Q You have a financial stake in the outcome of this
litigation, right?

A I believe so, yes.

Q Now you said that you joined SCO after the SCOsource
business had been launched, right?

A Yes.

Q And as a result of that, given that you joined SCO in
2003, you had no involvement whatsoever in the drafting of
the underlying asset purchase agreement between Novell and
Santa Cruz Operation entered into in 1995, right?

A That's correct.

Q You had no involvement whatsoever in the drafting or
negotiations over either Amendment No. 1 or Amendment No. 2,
right?

A True.

Q Now in terms of the SCOsource program itself, that

1848

licensing program was directed, I think you told us, to
Linux users, right?

A Corporate Linux users I believe.

Q And the basic premise of the SCOsource program was the
suggestion that Linux contained elements of the UNIX
software code, right?

A I would agree with your general description, yes.

Q And the thrust of the SCOsource program was that Linux
thereby infringed UNIX, right?

A Yes.

Q And the code that was claimed to be protected, that is
the protected UNIX code that SCO alleged was in Linux, was
UNIX System V code, right?

A I believe so, yes.

Q So it's correct, then, that SCO's claim has been and
the SCOsource program was premised upon the notion that
Linux infringes UNIX System V software code, right?

A I believe that's correct, yes.

Q It's not premised upon the notion that Linux or other
operating system software infringes UnixWare, right?

A I would disagree with that. UnixWare is System V,
based on System V, and just the latest version, as I
understand it.

Q So is it SCO's contention that the SCOsource program is
premised on the notion that Linux users are infringing

1849

UnixWare?

A In part, I believe that's correct.

Q Now in connection with -- I think they called it Malloc
code. Did I get that correct?

A Yes.

Q You indicated that someone at SCO had determined that
there was some portion of this Malloc code in UNIX, right?

A Yes.

Q And the UNIX code that you make reference to contains
how many lines of code?

A When I referenced -- which UNIX code are we talking
about?

Q The UNIX code that is the subject of the SCOsource
program.

A The whole UNIX operating code base?

Q I assume that's what the subject is --

A I think it's millions of lines of code.

Q More than 14 million lines?

A I don't know, but that would be in the ballpark.

Q So you would agree that the UNIX code that the
SCOsource program is seeking to enforce against Linux users
would be roughly 14 million lines of code, right?

A I think that's probably correct.

Q And the Malloc code that you had referenced contains no
more than 70 lines of code, right?

1850

A I haven't counted them, but that sounds like it's in
the ballpark.

Q So 70 of 14 million lines of code is what you were
suggesting was the basis for the infringement?

A No, that's not what I was suggesting at all.

Q When you brought these potential licensees into the
code room and pointed out the Malloc code, I think you told
us we're talking about 70 lines of code?

A That was one example that we showed them. That was
certainly not the entire presentation.

Q Now you also indicated that you believe that SCO could
not conduct its business without the UNIX copyrights; is
that correct?

A Its total business, that's true.

Q Now it is true that SCO has offered to sell its
business without the UNIX copyrights, correct?

A At this point in time the copyrights were potentially
going to go with that business when the issues get cleared
up, yes.

Q You're aware of a proposed transaction just in the last
year whereby SCO would have sold its business and retained
solely the UNIX copyrights, correct?

A Correct.

Q So you then were -- that is SCO was undertaking to sell
its business but believed that someone could buy and operate

1851

that business and not receive the UNIX copyrights, correct?

A Well, that's a portion of our business, as I said.

Q Again, just so we're all clear, SCO itself has proposed
transactions and preliminarily entered into one transaction
to sell its entire business but retain the UNIX copyrights?

A No, not our entire business, absolutely not.

Q The business that was related to UNIX, right?

A The product business, not the intellectual property
business.

Q Just so we're clear -- thank you for that correction --
what SCO has proposed to do is sell the UNIX business --
product business, but retain the UNIX copyrights?

A Yes, and the rights to enforce those copyrights.

Q That is not a product, is it?

A Well, the licensing could be a product.

Q It's not a physical product, is it? It's not even a
CD?

A No, it's not.

Q Now you were asked about letters that you exchanged
with Mr. LaSala, who at the time that you were engaged in
this letter exchange was general counsel of Novell, right?

A Correct.

Q And Mr. Normand didn't show you all the letters that
went back and forth, did he?

A No, he did not.

1852

Q He made a selection of some letters, but didn't show
all, correct?

A Correct. There was quite a barrage of letters that
went back and forth.

Q So, for example, he didn't show you the letters that
Mr. LaSala had written to SCO, right?

A No. He showed me a few of those.

Q But not all of them. For example, he didn't show you
the August 4th or August 20th of 2003 letters, did he?

A I don't believe so.

Q And in terms of the suggestion that Novell had issued a
directive relative to IBM or Sequent, you remember those
questions that Mr. Normand asked you about?

A Yes, I do.

Q You understood by virtue of going back and looking at
section 4.16(b) of the asset purchase agreement and reading
the letters from Mr. LaSala and others, that what Novell was
doing was asking SCO to act in accordance with the express
contractual provisions of Section 4.16(b), right?

A No, that's not right.

Q You thought that Novell was acting under some other
provision?

A No. They were relying on that provision, but it was an
inaccurate reading and interpretation of that.

Q So you disagreed with Novell's reading of the rights

1853

permitted under section 4.16(b), correct?

A Very much so.

Q If we could look at Exhibit 1 in evidence. I would
like to take a quick look at section 4.16(b).
Now as you look at what's on the screen, do you
understand this to be the operative language of 4.16(b)?

A Yes, as you highlighted 4.16(b), but 4.16(a) is also
part of the equation.

Q But, as you understood it, the claims that Novell was
making relative to the transaction with IBM and Sequent were
pursuant to section 4.16(b), right?

A Well, they were attempting to do that, yes.

Q So let's take a look at that. It says buyer -- that
would have been Santa Cruz Operation, right?

A Yes.

Q -- shall not, and shall not have the authority to,
amend, modify or waive any right under or assign any SVRX
license without the prior written consent of seller, right?

A Yes, that is what this sentence says.

Q The seller would be Novell, correct?

A Correct.

Q It says, in addition, at seller's sole discretion and
direction -- that would be Novell's sole discretion and
direction, correct?

A Correct.

1854

Q -- buyer shall amend, supplement, modify or waive any
rights under, or shall assign any rights to, any SVRX
license to the extent so directed in any manner or respect
by seller, correct?

A Yes, but you have to go up to the prior provision to
see what this means.

Q If you look at that language that we've just read,
there is not a qualifier there, is there?

A What do you mean?

Q The sentence does not have a qualifier or a limitation,
does it?

A Yes, it does.

Q Well, let's read the words again. In addition, at
seller's sole discretion and direction, buyer shall amend,
supplement, modify or waive any rights under, or shall
assign any rights to, any SVRX license to the extent so
directed in any manner or respect by seller. You see that,
right?

A I do.

Q Then it continues, in the event that buyer shall fail
to take any action concerning the SVRX licenses as required
herein, seller shall be authorized and hereby is granted,
the rights to take any action on buyer's own behalf. Do you
see that?

A I see that language.

1855

Q So you understood when you engaged in this exchange
with Mr. LaSala that Novell was taking the position that
under section 4.16(b) they had the right to direct the
successor of Santa Cruz Operation, that is SCO, to amend,
supplement, modify or waive any rights with respect to an
SVRX license, right?

A I think I understood what Novell was claiming. I just
disagreed with it.

Q Well, in answer to my question, you understood that
Novell was giving direction to SCO pursuant to this
contractual provision, right?

A Yes, this whole section I would say.

Q You also understood that the contractual language
agreed to and to which Santa Cruz had agreed to and SCO was
bound provided that in the event that the buyer, which
became SCO under the language of this agreement, if it were
to fail to take the action that Novell directed, that Novell
was authorized and granted the right to take action on SCO's
behalf, right?

A If it was legitimate, yes.

Q So the contention by SCO is somehow it was illegitimate
what Novell asked SCO to do?

A It was not authorized by this agreement.

Q You are not aware of any court order having been issued
that affirmed that IBM has infringed any copyright interest

1856

held by SCO, are you?

A Say it again.

Q You are not aware of any court decision that has
affirmed or confirmed a claim by SCO that Linux infringes
any copyrights, have you?

A No. That case is still alive.

Q So any potential licensee who had any question in their
mind about whether or not SCO would prevail with those
claims still would have those questions in their mind,
right?

A Maybe, maybe not.

Q Well, you are not aware of any ruling by any court that
has adjudicated that, are you?

A Correct, but that's not the only analysis people would
go into.

Q Now when you had communications with potential
licensees and the issue of IBM came up or Novell came up,
you suggested to those potential licensees that what they
ought to do in order to resolve in their own minds any issue
is to go to the publicly available documents that discussed
the dispute, right?

A I don't recall necessarily saying that. That certainly
could have been something we told them, among other things.

Q Do you recall, for example, in a telephone call with
Google that you stated that, quote, that's an issue out

1857

there and all the documents are out publicly, so you should
take a look and decide for yourself?

A Yeah, but that doesn't just mean court documents.
There are a lot of documents available out there.

Q Just so we're clear, whenever you met with potential
licensees or had communications with them and there was an
issue that was raised as to either the dispute with IBM or
any dispute with Novell, you suggested to these potential
licensees that they ought to go to sources that identified
publicly the background of the dispute and the legal
documents that pertain to it, right?

A In general terms, yes.

Q And the source of that information was Novell, right?

A Not necessarily. They were one source.

Q So what you expected potential licensees to do is if
they had a question as to whether they should take a
SCOsource license is to go to look at sources like Novell
who had made public the relevant documents and
communications between the parties and make their own
decision, right?

A Yes.

Q That was because you believed that those potential
licensees could make their own determination as to who was
right and who was wrong?

A To some degree, yes.

1858

Q That's because you felt that reasonable minds, even
though they might differ, would be able to discern who had
the better argument, correct?

A In some situations that would be true.

MR. BRENNAN: One second, Your Honor.

BY MR. BRENNAN:

Q Just a question or two more, Mr. Tibbitts.
When we talked about the claim by SCO that perhaps
either UNIX or UnixWare might infringe Linux, what
particular versions of UNIX or UnixWare do you have
reference to?

A I believe you said that UNIX or UnixWare infringed
Linux.

Q I'm sorry. I got it backwards. Let me restate the
question. Thank you.
So when you were discussing with us the issue as to
whether Linux was infringing either UNIX or UnixWare, what
versions?

A Of Linux?

Q No. What versions of UNIX or UnixWare.

A That I don't have the answer to. I know it's the
System V versions, but we've had people much more technical
than me weigh in on that. Sorry, I don't know the answer
for you today.

Q Just so we're clear, when you had communications with

1859

potential licensees and talked with them or communicated
with them about Linux potentially infringing either UNIX or
UnixWare, you didn't have in mind what versions of UNIX or
UnixWare were being infringed?

A I didn't specifically, but I always went to those
meetings with people who are more technical than me, and I
believe they had that information at their disposal.

Q Now when SCOsource was launched, that was launched
essentially as a new business, right?

A Well, a new business -- or a new licensing line within
all the other licensing lines we had, so --

Q SCOsource was deemed to be a new organization within
SCO, right?

A A new division within SCO.

Q And SCOsource was something that was created in about
August of 2003, right?

A The division was not created then. The division was
formed earlier in the year. In August, what I was
testifying to is I think that's when we came up with the
right to use license as requested by Computer Associates.

MR. BRENNAN: I have no further questions. Thank
you.

THE COURT: Thank you, Mr. Brennan.

Mr. Normand.
//

1860

REDIRECT EXAMINATION

BY MR. NORMAND:

Q Mr. Tibbitts, do you recall being asked by Mr. Brennan
about section 4.16(b)?

A I do.

MR. NORMAND: Mr. Calvin, could you pull that up.

BY MR. NORMAND:

Q I thought I heard you refer to 4.16(a) in connection
with the answers you gave. Do you recall that?

A Yes.

Q Why did you mention 4.16(a)?

A Because you can't get anything out of 4.16(b) unless
you read and understand 4.16(a).

Q Why do you think that is?

A Well, I recall Mr. Brennan asking me about a sentence
in (b) and whether there were any qualifications. I said
there clearly were, and the qualification is with the term
SVRX license, which takes you up to 4.16(a) where it talks
about royalties due under SVRX licenses. Then there is a
parenthetical as listed in detail under item VI of schedule
1.1(a) hereof and referred to as SVRX royalties. So then
you have to go to the schedules and try and figure out what
we're talking about here.

Q So why do you think the schedules are relevant to this
issue of Novell's waiver rights?

1861

A Well, because that at least begins the discussion on
how broad that waiver right is.

Q How so?

A Well, because it tells you what the licenses are that
they would have some right to deal with.

Q And what have you understood those licenses to be that
Novell had waiver rights over?

A Well, product licenses underneath the various master
agreements for which binary royalties were being paid back
to Novell when this transaction came together.

Q Were those the kind of agreements at issue in the
breech of contract claims against IBM?

A No, not down to that level. The master agreement is
involved, but that is in a different section of the
schedule.

MR. NORMAND: Mr. Calvin, could you pull up
Amendment 2. Pull up all of paragraph B, including the
subsections, please.

BY MR. NORMAND:

Q Mr. Tibbitts, do you have a view as to whether
Amendment No. 2 clarified the scope of Novell's waiver
rights?

A Yes, it did.

Q How so?

A Well, one of the provisions is right at the bottom

1862

where it says, Novell may not prevent SCO from exercising
its rights with respect to SVRX source code in accordance
with the agreement. That's one of the places that jumps to
mind.

MR. NORMAND: Now, Mr. Calvin, bring us back to
4.16.

BY MR. NORMAND:

Q And I wanted to show you, Mr. Tibbitts, what you
referred to as the first three lines of (a), the reference
to the SVRX licenses, and then you referred to item VI of
schedule 1.1(a). Do you recall that?

A Yes.

Q Let's go to item VI of schedule 1.1(a), if we can.

MR. NORMAND: That's at the bottom, Mr. Calvin.

BY MR. NORMAND:

Q Mr. Tibbitts, how did you understand this item VI to
relate to the answer you just gave about section 4.16(a)?

A Well, this is where it takes you on the notion of what
are SVRX licenses and then SVRX royalties. As you see, it
says, all contracts relating to the SVRX licenses listed
below. So SVRX licenses, as I think we've heard, these are
not technically licenses, so this is one place the agreement
is confusing. These are products. And then you have the
product schedules that list the royalty payments that go
with that. So that is my understanding of what this is

1863

pointing us to here, and it's a subset of all contracts that
relate to this.

A This amendment does not give Novell the right to
increase any SVRX licensee's rights to SVRX source code nor
does it give Novell the right to grant new SVRX source code
licenses. In addition, Novell may not prevent SCO from
exercising its rights with respect to SVRX source code in
accordance with the agreement.

Q Now, in summary, when you see the reference to SVRX
source code on the bottom of that paragraph, what do you
understand that to refer to?

A Well, that is the crown jewels of the core UNIX
intellectual property. That's the UNIX source code. And
that is what Novell was trying to direct us to waive our
rights over. They didn't have that right.

Q Let me ask you a couple more questions, Mr. Tibbitts.
You were asked by Mr. Brennan about whether there are any

MR. NORMAND: No. We're going to have a
discussion of what the status of the pending litigation is.

THE COURT: Let's see what the questions are.

MR. BRENNAN: Your Honor, there were specific
agreements. What I asked about was limited to suggestions
made earlier. This would be a violation of an express
agreement. Perhaps we should have a side-bar to make sure
we're clear on this issue.

THE COURT: Let's go ahead and take a recess.

(Jury dismissed)

MR. NORMAND: We were so close to being done, Your

1865

Honor.

THE COURT: I know. I could tell you were just
anxious.

MR. NORMAND: If it helps, the questions were not
going to go to the merits. The questions were going to go
whether there's pending litigation, whether experts have
been hired, whether there's evidence for the Court to
consider, and whether Mr. Tibbitts understands it will be
resolved in the future.

THE COURT: Mr. Brennan.

MR. BRENNAN: If it's limited to that.

MR. NORMAND: I thought there was a suggestion
that there will never be a resolution in SCO's favor. I was
trying to put that suggestion to bed.

MR. BRENNAN: Otherwise, we're going to get into
this duel because there are experts on the other side, there
is a summary judgment motion --

THE COURT: We don't want to do that.

MR. NORMAND: We don't want a mini trial.

THE COURT: We don't. As long as the questions
are as narrow as just defined, I think we're okay.

MR. BRENNAN: If Mr. Normand does ask those
questions, then there would have to be the response there
are experts on the other side.

THE COURT: Well, you would get another shot, Mr.

1866

Brennan. You may ask those questions.

MR. BRENNAN: Thank you.

THE COURT: All right. We'll take 15 minutes.

(Recess)

***** Part 2 *****

1867

(Recess)

THE COURT: What will be next?

MR. SINGER: I believe what will be next is we
will turn over the baton, although we are not resting our
case, and, Mr. LaSala, we are informed, would be their first
witness.

MR. ACKER: That is correct, Your Honor.

MR. SINGER: There are a couple of issues
concerning Mr. LaSala before bringing back the jury, if we
could take a few moments now.

THE COURT: Let's do it.

MR. SINGER: One of them I think is a very quick
issue, and I believe I'm entitled to elicit the fact that
there is a joint defense agreement between IBM and Novell,
and it goes to credibility. I am not planning on using the
agreement or going beyond that, but I believe that is
relevant just like other things are relevant to the
credibility of witnesses.

MR. ACKER: We would disagree, Your Honor.
Essentially he is trying to put before the jury that there
are protected communications between I.B.M. and Novell and
we think that is improper.

THE COURT: Well, let me see. Are you trying to
put before the jury that there are protected communications,
or are you focusing only on the fact that there is a joint

1868

defense agreement?

MR. SINGER: Only on the latter.

MR. ACKER: That is the very purpose for the joint
defense agreement. That is the very essence of the joint
defense agreement itself.

THE COURT: But if there are no questions elicited
to that effect, the jury will never know that.

MR. ACKER: Well, then there is no relevance to
the fact that there is one.

MR. SINGER: The relevancy is that they have
entered into a joint defense agreement believing that their
interests are aligned.

THE COURT: I will allow you to ask a limited
question to that extent.

MR. SINGER: Your Honor, there are three documents
that --

MR. ACKER: Before we move on, we ask that the
jury be instructed as to what is a joint defense agreement,
Your Honor, so that the jury has context to place that in.

MR. SINGER: Well --

MR. ACKER: Otherwise it is going to be left as it
is, something that is nefarious or untold as opposed to it
is common in everyday --

THE COURT: May I ask this, if I ask Mr. Singer to
elicit from your witness what it is in the most bare bones

1869

terms, would that be an agreeable way to do this?

MR. ACKER: I'll do it on redirect. I need to be
allowed to do it on redirect.

THE COURT: You certainly will be allowed to do
that.

MR. SINGER: There are three documents, and these
are Exhibits 6, 7 and 8 to the memorandum which we submitted
to the Court on privilege and that will come up in
connection with Mr. LaSala's testimony. These are all
internal documents among lawyers, for the most part, at
Novell. There may be a business party in one of the
communications. Part of the documents were redacted and we
don't think these are admissible.

First of all, they are self-serving hearsay. You
can't create a memorandum and then say, well, I'm going to
introduce this to help prove the point of what would be
contained within the context of that memorandum. Beyond
that, there is a serious privilege issue. In the course of
this communication you selectively redact certain parts and
want to use other parts of the same memorandum. The
attorney-client privilege protects communications, and they
can't selectively use part of these communications while
withholding others.

MR. ACKER: What these are, Your Honor, is these
are e-mails that Mr. Jones wrote immediately after having

1870

telephone conversations with Mr. McBride. In fact, these
are exhibits that Mr. Singer himself has shown to witnesses
including Chris Stone when he testified and he was shown
these exhibits by SCO.

THE COURT: Have they been admitted?

MR. ACKER: They have not been admitted, Your
Honor.

MR. SINGER: No.

MR. ACKER: He is wrong about the hearsay issue as
well, but I'll get to that in a second.

The only portions that have been redacted, Your
Honor, are legal advice or opinions of lawyers in the
e-mails. The actual substance, that is the factual
percipient witness testimony regarding what was said by
Mr. McBride to Mr. Jones on these different dates, that has
not been redacted and that was inquired about at length in
Mr. LaSala's deposition and in Mr. Jones' deposition as
well. So he is wrong about the privilege issue.

On the hearsay issue, it is a quintessential past
recollection recorded, Your Honor. Here is a guy that has a
telephone conversation with Mr. McBride, types an e-mail
saying what was said some seven years ago, and he certainly
can use that document at the very least to testify about the
substance of the conversation. We would submit under past
recollection recorded it is also admissible as a non-hearsay

1871

document.

THE COURT: I can see it being used to refresh his
memory, if he is asked do you remember the conversation and
do you remember what was said and what may have been
communicated without the document itself being admitted.

You're seeking its admission --

MR. ACKER: Well, I don't know how the testimony
is going to go, Your Honor, but we certainly can use these
documents with these witnesses to place them in the frame of
mind of when certain conversations occurred and when they
learned about certain conversations and then allow them to
testify --

THE COURT: To refresh their memory?

MR. ACKER: Yes, and to testify about the
substance of what they knew.

THE COURT: Again, the documents can be used to
refresh memory without being admitted to the jury.

MR. ACKER: I understand, Your Honor. I also
think that this is a classic example of past recollection
recorded. There are many events where they took place years
ago where someone contemporaneously wrote it down at the
time of the event immediately after the event what happened.
The classic example is writing down a license plate after
seeing it outside a window. Seven years from now you may
not remember that license plate, but you know you wrote it

1872

down and you can testify, yes, I saw it and I wrote it down.
You can look at the piece of paper that you wrote it done on
and say, yes, that is it, then you certainly can use that
document to testify and we also think it is admissible.

MR. SINGER: There are very limited exceptions for
this past recorded recollection. If the witness is to
testify from his memory he can't introduce a self-serving
document. If he does not have a recollection it can be used
to refresh his recollection, but it does not come into
evidence. I think that would resolve the issue, as long as
you are not seeking to move this into evidence. If you're
not seeking to move it into evidence, I don't think we need
to deal with the privilege issue, because he is just using
it to refresh recollection.

MR. ACKER: Then, of course, if there is
cross-examination of Mr. Jones or Mr. LaSala on these
conversations with Mr. McBride, or SCO attempts to cast
doubt on their ability to recall the conversations or what
the substance of the conversations are, then we certainly
can use the documents as evidence that this is a prior
consistent statement and past recollection recorded to
bolster their memory of that conversation when it is being
alleged that they can't remember.

THE COURT: The rule on recorded recollection says
that the memorandum of record may be read into evidence but

1873

may not itself be received as an exhibit unless offered by
an adverse party.

So it may be used and it may be actually read, but
it can't be admitted and sent to the jury.

MR. ACKER: That is my understanding, Your Honor.

THE COURT: All right.

MR. SINGER: Your Honor, we don't believe that
they even get to do that unless we challenge the testimony
on direct as to the recollection.

THE COURT: Let's wait and see how that plays out.

MR. SINGER: Yes.

THE COURT: Is that all that you have?

MR. SINGER: That's all that we have, Your Honor.

MR. ACKER: That's all that I have.

(WHEREUPON, the jury enters the proceedings.)

THE COURT: All right.

Go ahead, Mr. Normand.

MR. NORMAND: I have no further questions for Mr.
Tibbitts.

MR. BRENNAN: I have just a few, Your Honor.

THE COURT: Go ahead.

RECROSS-EXAMINATION

BY MR. BRENNAN

Q. Mr. Tibbitts, so that we can be clear, when you went
and made various presentations to potential SCO licensees

1874

and were talking about UNIX code, you were referring to
pre-asset purchase agreement versions of UNIX, right?

A. In what context?

Q. Well, when you were talking to potential licensees
about the SCOsource program.

A. In part, yes.

Q. In fact, if we could take a quick look at Trial Exhibit
1, and we would like you to look at Schedule 1.1-A, Roman
numeral six that you were asked about by Mr. Normand.
You'll see that there are various products that you
have described, and each of those products is a pre-asset
purchase agreement version of UNIX, correct?

A. I believe that is the case, yes.

Q. Then if we could take a look at amendment number two to
the asset purchase agreement, and Mr. Normand asked you
about subpart B of amendment number two.
Let's just read together what this provision of
amendment number two addresses. You'll see at the top it
says, quote, except as provided in Section C below, and
notwithstanding the provisions of Article 4.16, Sections B
and C of the agreement, any potential transaction with an
SVRX licensee which contains a buy out of any such
licensee's royalty obligation shall be managed as follows.
Do you see that?

A. I do see that.

1875

Q. Then there are five numbered paragraphs.
Do you see those as well?

A. Yes.

Q. So amendment number two and this subpart B that is
addressed by its own terms, was focused on the buy out of
licensee's royalty obligations, right?

A. That language is there, yes.

MR. BRENNAN: Thank you. No further questions.

THE COURT: You may step down. Thank you. Unless
you would rather stay.

THE WITNESS: It was a lot of fun.

THE COURT: Mr. Singer.

MR. SINGER: Your Honor, at this time, while there
are other witnesses we will be calling later in the week, we
are yielding the floor to Novell.

THE COURT: Mr. Acker?

MR. ACKER: Novell would call as its first witness
Mr. Joe LaSala, and he will be here in a second.

JOSEPH A. LaSALA, JR.

Having been duly sworn, was examined

and testified as follows:

THE WITNESS: Yes. Good morning.

My name is Joseph A. LaSala, Junior. The last
name is L-a-S-a-l-a.

DIRECT EXAMINATION

1876

BY MR. ACKER

Q. Good morning, Mr. LaSala.

A. Good morning.

Q. Tell the ladies and gentlemen what you do for a living.

A. Yes. I am general counsel of a company outside of
Washington, D.C. called Discovery Communcations.

Q. Is there any relationship between Discovery
Communcations and the Discovery Channel?

A. Yes. The Discovery Channel is part of Discovery
Communcations.

Q. That is the channel of the Deadliest Catch, am I right?

A. Yes, among others.

Q. How long have you had that job, sir?

A. Since mid January of 2008.

Q. What are your responsibilities as general counsel at
Discovery Communcations?

A. Broadly I'm responsible for all legal matters that the
company is involved with. I supervise a legal department of
about 20 lawyers on a worldwide basis. I advise management
and the board of directors of the company on legal matters.

Q. Back up and tell the ladies and gentlemen of the jury
what both your undergraduate and advanced degrees are in.

A. Yes. I received a bachelor's degree from the Catholic
University of America in Washington, D.C. in 1976. I
received a law degree from the Columbus School of Law at the

1877

Catholic University of America in 1981.

Q. What job did you have before going to work for
Discovery Communications?

A. I was general counsel at Novell.

Q. During what period of time were you general counsel for
Novell?

A. From July of 2001 through mid January of 2008.

Q. Generally what were your responsibilities in that
position between 2001 and 2008?

A. Similar to those that I have at Discovery. Again, I
was the general counsel there responsible for all of the
legal matters at Novell, supervising the staff of lawyers,
and advising the management of the company and the board of
directors on legal issues.

Q. Who were the senior executives that you worked with
during the period at Novell between 2002 and 2003?

A. Principally Mr. Jack Messman, who was the C.E.O. of the
company, Mr. Chris Stone who was the C.O.O. of the company,
and Mr. Carl Ledbetter, who was our chief technology officer
and our then C.F.O., chief financial officer.

Q. Why did you decide to leave Novell in 2008 and go to
Discovery?

A. I had an opportunity to go to Discovery. I was
recruited by the company to come to work for them, and after
considering all of the alternatives and considering what was

1878

in the best interest of myself and my family I decided to
make the move.

Q. Let me place you back in time to the fall of 2002. At
some point during the fall of 2002 did you became aware of
issues at Novell relating to a man by the name of Darl
McBride and a company called SCO?

A. Yes, I did.

Q. How did you become aware of those issues?

A. I received a series of e-mails and phone conversations
from a lawyer who worked for me conveying to me
conversations that he and others had had with Mr. McBride
around that time.

Q. Had you ever heard of Mr. McBride or SCO prior to the
fall of 2002?

A. No, I don't believe that I had.

Q. Let me show you what we have marked as K-11.
If you could take a look at that, sir.
Do you recognize K-11?

A. Yes, I do.

Q. What is it?

A. This is an e-mail from Mr. Jones to me and one of our
colleagues concerning a conversation that he had had with an
assistant to Mr. McBride around this time. It advises --

Q. Before going into the substance of it, is this an
e-mail that you received on or about November 20th of 2002?

1879

A. Yes, it is.

Q. In addition to receiving this e-mail from Mr. Jones,
did you also speak with Mr. Jones?

A. I did.

Q. Did Mr. Jones relay to you information regarding his
conversation with Mr. McBride?

A. He did.

Q. What did he say?

MR. SINGER: Objection. This is hearsay. Mr.
Jones works for Novell.

MR. ACKER: It goes to Mr. LaSala's state of mind,
which is clearly at issue given their slander of title.

THE COURT: The Court will overrule the objection.

BY MR. ACKER

Q. What did Mr. Jones say?

A. Mr. Jones conveyed to me the substance of his
conversation that he received from Mr. McBride's assistant,
which was essentially that she was asked by Mr. McBride to
gather documents related to an asset purchase agreement that
occurred between S-C-O and Novell in the mid 1990s.
In addition, Mr. Jones told me that he understood that
one of the purposes of the request to be to further SCO's
interest in asserting intellectual property rights that it
thought it owned related to UNIX against Linux end users.

Q. What was your reaction to this initial conversation

1880

with Mr. Jones?

A. Well, my initial reaction to this conversation was,
again, pretty much one event at a busy day at Novell. It
was the first I had heard of this kind of thing. I said to
Mr. Jones, well, thank you, and I appreciate you telling me
and keeping me informed. Let me know of any further
developments.

Q. Let me show you another document that we have marked as
Exhibit R-11.
Do you recognize that e-mail?

A. Yes, I do

Q. Is this another e-mail that you received from Mr.
Jones?

A. It is.

Q. And the date you received it?

A. December 4, 2002.

Q. What information did Mr. Jones provide to you in this
e-mail, R-11?

A. Well, he wanted to update me on further communications
that he and one of this colleagues had with Mr. McBride at
SCO. He conveyed to us Mr. McBride's renewed request for
Novell's help in getting these documents that he had been
asking for.
He, for the first time to my knowledge, referenced the
fact that SCO was intending to announce a Linux licensing

1881

program, and that he very much wanted Novell's cooperation
in getting copies of those agreements in furtherance of
SCO's Linux licensing program.

Q. Your reaction to this second e-mail and communication
from Mr. Jones, was it any different than your reactions to
the first?

A. Well, slightly. I guess my concern would be slightly
more heightened at that point, understanding that Mr.
McBride had in mind a specific program related to Linux, and
I knew at our company that Novell had interests in getting
into and had taken certain steps and made certain
investments in the Linux business, so I was I guess slightly
more concerned at that point about what Mr. McBride might be
up to.

Q. At this point in time, in December of 2002, had you
gone back and read the asset purchase agreement or any of
its amendments?

A. No, I had not.

Q. Were you involved at all in the asset purchase
agreement and the execution or negotiations of the agreement
back in 1995 or 1996?

A. No, I was not.

Q. What was your response back, if any, to Mr. Jones
getting the second communication in early December of 2002?

A. Well, my response was, okay, Greg, keep me posted for

1882

sure if you get anything further, because this seems to be
going in a more serious direction than perhaps we had
initially thought. Mr. McBride makes reference to Greg and
Greg tells me that in his e-mail that, you know, he might be
elevating the conversation to others in the company.

Q. Let me show you what we have marked as N-12.
Do you recognize what has been admitted as N-12?

A. Yes, I do.

Q. What is that?

A. This is a copy of a press release that SCO issued on
January 22, 2003, where it announces the establishment of
SCOsource to license the UNIX intellectual property.

Q. Did you become aware of this announcement on or about
January 22?

A. Yes, I did.

Q. What was your reaction at Novell when you saw this
press release in January?

A. Our concern at this point is very high, as you might
imagine, given our interest in Linux, that upon reflection
this fulfilled Mr. McBride's promise that he was going to be
announcing a campaign against Linux end users asserting that
SCO was the owner of the copyrights to UNIX. We had a point
of view ourselves on that ownership position that we
subsequently did more work on, and so we were quite
concerned at this point in time.

1883

Q. Why is Novell concerned that SCO is announcing this
SCOsource product? Why does that create issues for Novell?

A. Principally because Novell, as I mentioned a few
moments ago, had previously announced its intention to get
involved in the Linux business. There had been a lot of
work done, there had been a lot of planning done, and we
viewed Linux as an area of computing that we thought we
could really create some value and service customers well.
We saw this as a threat to our potential business
opportunities and our ability to be successful with Linux.

Q. Why was this campaign a threat to Novell's intent to
get into the Linux business?

A. Because if Mr. McBride and SCO were threatening Linux
end users with copyright infringement and making demands for
payment from them, that would have the potential to slow
down our own initiatives and throw some roadblocks in the
way of our ability to conduct our own business. It would
effect existing relationships with customers as well as
potentially future relationships with potential customers.

Q. Let me show you another e-mail that is marked as W-12.
Do you recognize what we have marked as W-12?

A. Yes, I do.

Q. What is it?

A. It is yet another e-mail from Mr. Jones to me dated
February the 25th of 2003, where he updates me on subsequent

1884

conversations that one of our colleagues had with Mr.
McBride concerning the subject that Mr. McBride had been
calling about, the copyright ownership related to UNIX and
his desire to get copies of the asset purchase agreement.
Mr. Jones tells me that our colleague, and his name was Mr.
Wright, told Mr. McBride that we were not in a position to
fully evaluate the request at that time.
Again, Mr. McBride suggested that he had a relationship
with Mr. Messman, our C.E.O., and that he might have to take
it upon himself to elevate this issue to Mr. Messman.

Q. Given the information that you have to date about the
earlier communications in the fall of 2002, and the
announcement of SCOsource and now this e-mail, what is your
reaction in February of 2003?

A. Our concern is quite heightened at this point in time.
Again, coming on the heels of the SCOsource announcement
just a few weeks before, and wherein SCO asserted its
ownership of the UNIX copyrights, and the fact that Mr.
McBride was continuing to ask us for documentation and
cooperation such that he could pursue this campaign really
caused us concern.

Q. At some point in time do you and your staff sit down
and review the A.P.A.?

A. Yes, we did.

Q. Approximately when was that?

1885

A. Well, I don't remember exactly when it was that we
began to review the A.P.A. in earnest. It was around this
time, though. I would say it was sometime in the February,
late February time frame is my best recollection.

Q. Upon that review, what conclusion did you reach?

A. Well, the conclusion that I reached after our review of
the asset purchase agreement was that Novell was the
rightful owner of the UNIX copyrights, and that they had not
transferred to SCO as a result of the asset purchase
agreement that was executed in 1995.

Q. What portion of the A.P.A. did you base that conclusion
on?

A. Well, there is a particular schedule attached to the
agreement. It is referred to as Schedule 1.1-B and it is
entitled excluded assets. It lists assets which are
excluded from the transfer. Copyrights are expressly
excluded from the transfer of the assets pursuant to that
schedule.

Q. Did you learn on or about early March of 2003 about a
lawsuit that SCO filed against Internal Business Machines or
I.B.M.?

A. I did.

Q. How did you become aware of that?

A. I became aware of it through the press and on the web.
It was a significant development in the industry, the fact

1886

that SCO was choosing to sue I.B.M., and there was publicity
about that.

Q. Was there significant publicity about it?

A. Yes, there was significant publicity about it. It was
well reported and well known throughout the industry. There
was a lot of commentary about it and a lot of attention paid
to it.

Q. Did that lawsuit combined with the other information
that you had about SCOsource at that point, did that give
you any concern regarding Novell's business interests?

A. Yes, it did. It suggested to us in the strongest form
possible that SCO was serious about promoting its campaign
against Linux, and that this was the first official salvo
that it was going to launch against the Linux community.
That really concerned us because of what I have said,
our ongoing and continuing interest in the Linux business
for ourselves. We were concerned about our own business
prospects as a result of all of this.

Q. After the lawsuit against I.B.M., did you receive
communication from someone representing I.B.M.?

A. Yes, I did.

Q. Can you explain that to the jury?

A. Yes. I don't recall the exact date, but it was within
a matter of days after the lawsuit against I.B.M. was filed,
that I received a call from a gentleman named Mr. David

1887

Marriott that was outside counsel for I.B.M. He called me.
I remember I took the call at home on my cell phone at
the end of the day. He called me and asked me if I was
aware of the lawsuit. I told him that I was. And whether
or not I was aware that Novell had certain rights under the
asset purchase agreement that could be beneficial to I.B.M.?
I told him that, you know, we were really just beginning to
get into our analysis of the asset purchase agreement, and
that I would take a look at it carefully and make our own
judgment about the effect of this language that he was
referring me to, and make our own independent judgment about
it.

Q. Did you make any promises to Mr. Marriott about what
Novell may or may not do?

A. No, I did not.

Q. Did he make any demands of Novell in terms of what they
should or should not do?

A. No, he did not.

Q. About how long did this conversation last?

A. No more than five minutes. It was less than five
minutes to my recollection.

Q. All right. At some point did you yourself have a
direct conversation with Mr. McBride on this issue of
copyright ownership?

A. Yes. I was a participant in a telephone conversation

1888

between Mr. Stone and Mr. McBride.

Q. Let's set the stage for the jurors.
Where were you and Mr. Stone?

A. I was in Mr. Stone's office.

Q. Do you recall approximately when this was?

A. My recollection is that it was in the mid May time
frame.

Q. Do you recall who called whom?

A. My recollection is that Mr. Stone placed that call, but
that he was returning a call from Mr. McBride to Mr. Stone.

Q. Were you able to hear that conversation?

A. Yes. I was on the speakerphone, and Mr. Stone told Mr.
McBride that I was in the room.

Q. Do you recall the substance of the conversation?

A. I do.

Q. What was that?

A. Well, it was essentially Mr. McBride reiterating what
had now been repeated requests to Novell to have an
amendment to the asset purchase agreement so that SCO could
get the copyrights.

Q. What was the response from either yourself or
Mr. Stone?

A. It was Mr. Stone who responded, and he told Mr. McBride
that Novell had no interest in transferring those copyrights
to SCO, that by this time we had a firm view that those

1889

copyrights were owned by Novell, and that we had no interest
in participating in his SCOsource license campaign against
Linux end users.

Q. At this point in time, the mid May time frame, had you
or to your knowledge anyone else seen an executed copy of
amendment number two to the asset purchase agreement?

A. No.

Q. Had you seen an unexecuted copy?

A. I may have seen an unexecuted copy of amendment number
two by that time.

Q. Do you recall under what circumstances?

A. Yes. I think it was Mr. Jones who advised me around
that time that we had located an unexecuted copy of a
document that was entitled amendment number two, asset
purchase agreement.

Q. What was your reaction to seeing the unexecuted
amendment?

A. My reaction was first and principally that I thought
this document had no legal effect because it was not
executed. I read it. It was interesting what it said, but
I concluded that it had no legal effect and pretty much
dismissed it. I have been involved in enough transactions
over the course of my career to know that drafts of
documents are made with regularity, and more often than not
they are not executed. I saw it as a document that had no

1890

legal effect on the question at issue.

Q. Did you give any instructions to anyone in your legal
team about making efforts to see if there was an executed
version of it?

A. I did. I recall sometime around then asking Mr.
Lundberg, who was a lawyer who worked for me at the time, to
look, to conduct -- you know, I think I said to him words to
the effect, Jim, turn the company upside down because if
there is an executed copy of amendment number two in
Novell's files, that is something that would be relevant and
we would like to know about that.
Jim told me that he had done that and reported back
sometime later that, you know, we have sent people off site
and looked through various files within the law department
and, you know, despite these efforts we could not find an
executed copy of amendment number two in the company's
files.

Q. Let me show you another document that was been admitted
as H-14.
If you could take a look at that.

A. Okay.

Q. Do you recognize that document?

A. I do.

Q. What is it?

A. It is a letter dated May 12, 2003 to Mr. Messman, the

1891

C.E.O. of Novell, from Mr. McBride. I came to understand
that the exact version of this letter had also been sent to
some 1,500 companies in the United States.

Q. In mid May, the same date?

A. I believe it was the same date.

Q. What was the reaction in the software community when
this letter went to Mr. Messman as well as thousands of
letters, to 1,500 other companies?

A. It was -- the attitude was game on here, I guess. Mr.
McBride has decided to assert, we believe incorrectly,
ownership of the UNIX copyrights against hundreds of
companies including Novell, and is seeking to enforce what
he believed to be were his company's rights with respect to
the ownership of the UNIX copyrights against Linux end
users.
So the reaction in our company was profound, and the
reaction throughout the computing industry was like nothing
I had seen in the time that I was at Novell working in the
computing industry. There was a lot of commentary on it and
a lot of information around the web with respect to what
Mr. McBride was up to. It was quite concerning I would say
to most companies and most people knowledgeable and involved
in the industry.

Q. Did Novell make a decision sometime after May 12th and
after Mr. Messman received this letter that it needed to

1892

respond?

A. Yes, we did.

Q. Was that response to be public?

A. Well, after we received this letter, as you might
imagine, I got together with my colleagues and we began
thinking about what an appropriate response would be, and
whether the response should be private or public. We
concluded after some thought and deliberation that we
finally had to make the public aware of our position on this
very important issue, because Mr. McBride's campaign against
Linux was in full swing about this point.
To my knowledge Novell had made no public comment at
all at this point in time. That is my recollection. We
thought, given the full force of the campaign that had been
launched, and now that this May 12th letter, which made some
demands on Linux end users and some allegations that we
thought were unfounded and inappropriate to make, we felt it
was important to respond specifically and substantively to
Mr. McBride's letter and to make that document public as
well.

Q. What form was the response to take?

A. In the form of a letter to Mr. McBride and in the form
of a press release publishing in effect the letter to the
public.

Q. Who was tasked with overseeing the preparation of both

1893

the letter back to Mr. McBride and the press release?

A. I was.

Q. Did you do that?

A. I did.

Q. Was there a date selected that this letter was to go
back to Mr. McBride and the press release was to be
released?

A. No.

Q. Did you subsequently select a date?

A. I didn't select a date, per se, but the letter went out
on May the 28th.

Q. Why was it that the letter went out on May the 28th?

A. Because that is when it was ready to go and all were
comfortable with the letter itself and the position that we
had taken, and it was ready to go on that day.

Q. Was the letter sent on May 28th in order to somehow
impact an earnings announcement that SCO had on that same
day?

A. No.

Q. Are you certain of that?

A. Yes, I am.

Q. Did you even know that SCO had an earning announcement
on May the 28th before the letter went out and the press
release went out?

A. I did not.

1894

Q. What was the reason for putting out the letter and
responding to Mr. McBride? Was it done in order to somehow
injure SCO or Mr. McBride, or was it done to protect
Novell's interests?

A. It was totally motivated to protect Novell's interests.
I have explained to you a little bit about our initiative
into this business, this Linux business. As you can
imagine, for a company that was preparing to devote a lot of
resources and spend a lot of money getting into the
business, this campaign of SCO's and Mr. McBride's really
had the potential to disrupt all of that.
With due respect, I had no opinion and I had really no
care, per se, with respect to Mr. McBride or Mr. McBride's
business. I was concerned about Novell's business and
Novell's business interests.

Q. Let me show you what we have marked as K-15 and J-15.

THE COURT: Mr. Acker, you realize that none of
these exhibits have been admitted?

MR. ACKER: I realize that, Your Honor. Many of
these have already been admitted through other witnesses,
Your Honor.

BY MR. ACKER

Q. Do you recognize those two documents, sir?

A. Yes, I do.

Q. Can you tell the ladies and gentlemen of the jury what

1895

each is?

A. Document J-15 is the letter that we have just been
talking about, Mr. Messman's response to Mr. McBride's May
12th letter. As you can see, it is dated May 28th.
Document K-15 is the press release that Novell issued
that day announcing that we had sent this letter to Mr.
McBride and quoting relevant portions of the letter, and
then attaching the letter itself to the press release.

MR. ACKER: I would move for the admission of J-15
and K-15.

MR. SINGER: These are already in evidence as SCO
exhibits, but we have no objection.

THE COURT: This is a problem, Mr. Acker.

MR. ACKER: I will make this promise to the Court,
that what goes to the jury is only one copy of these, but
the witness is testifying as to these, so if we can show
these to the jury while he is testifying.

THE COURT: J-15 and K-15 will be admitted.

Counsel, I do request, respectfully, that you both
make certain that we do not send duplications of the
documents to the jury.

MR. ACKER: I understand. Thank you.

(Defendant's Exhibits J-15 and K-15
were received into evidence.)

BY MR. ACKER

1896

Q. Let's take a look at first starting with the press
release which is K-15.

MR. ACKER: If we could highlight that, Mr. Lee,
the whole press release.

BY MR. ACKER

Q. Now, in the first paragraph of that press release,
Mr. LaSala, Novell wrote defending its interests in
developing service to operate on the Linux platform, Novell
today issued a dual challenge to the SCO Group over its
recent statements regarding its UNIX ownership and potential
intellectual property right claims over Linux.
Do you see that?

A. I do.

Q. Was that statement true when you made it on May 28th,
that you were putting out this press release in order to
defend Novell's interests?

A. Absolutely.

Q. Do you believe that statement still to be true to this
day?

A. Yes, I do.

Q. Is there anything that has happened in the almost seven
years since this press release came out that would make you
think that anything different, other than this press release
put out, in order to defend Novell's interest?

A. No, nothing has subsequently happened that has changed

1897

my view on that.

Q. Then in this next paragraph down, and we can highlight
that, first, Novell challenged SCO's assertion that it owns
the copyrights and patents to the UNIX System V, pointing
out that the asset purchase agreement entered into between
Novell and SCO in 1995 did not transfer those rights to SCO.
Did you believe that to be the case when this went out
on May the 28th?

A. Yes, I did.

Q. Do you still believe that to be the case today?

A. Yes, I do.

Q. Then you also indicate, second, Novell sought from SCO
facts to back up its assertion that certain UNIX System V
code has been copied into Linux. Novell communicated these
concerns to SCO via letter, text below, from Novell,
chairman and C.E.O., Jack Messman, in response to SCO making
these claims.
Do you see that?

A. Yes, I do.

Q. Why was it that Novell was putting SCO to its proof,
that is, asking them what in fact was their claim with
respect to UNIX and Linux and why were you doing that?

MR. SINGER: I object, Your Honor. This was
previously objected to on a privilege.

THE COURT: Mr. Acker, I'm going to have to rely

1898

on the representation.

MR. ACKER: I will move on.

MR. SINGER: I can show you the precise cite.

BY MR. ACKER

Q. Let me ask you this question. Was your request of SCO
that it actually put forth proof to support its claim, was
that done in an attempt to somehow harm SCO?

A. Not at all, no.

Q. Then you attached to this press release the actual
letter that Mr. Messman sent back to Mr. McBride on the same
day which has been admitted into evidence, correct?

A. Yes.

Q. Did anyone at I.B.M. tell you, or to your knowledge
anyone else at Novell, that it should put out this press
release on May the 28th?

A. No.

Q. To your knowledge did I.B.M. exert any influence that
resulted in the press release on May 28, 2003?

A. No, none whatsoever.

Q. Did you put out this press release on May the 28th in
order to protect Novell's interests or some other company's
interests?

A. Totally to protect Novell's business interests.

Q. Would you believe that you would have been doing your
job as general counsel of the company if you had not

1899

responded to Mr. McBride's activities up to the middle of
May of --

A. No. I felt it was imperative upon us to respond in a
formal and public and forceful way to Mr. McBride's May 12th
letter.

Q. At some point after the press release went out on May
the 28th, did you become aware that there was in fact an
executed copy of amendment number two to the asset purchase
agreement?

A. I did.

Q. How did that happen?

A. My recollection is that on the evening of June the 5th
that Mr. Messman advised me that he had had a conversation
with Mr. McBride, and that Mr. McBride told him that SCO had
identified a copy of an executed version of amendment number
two, and that he, Mr. McBride, would be faxing that to us.
That is how I found out about it.

Q. When did you actually see the document? Was it that
night or the next day?

A. It would have been the evening of June the 5th. I
can't remember the exact time.

Q. Then did you subsequently receive that morning of June
6th, receive a letter from Mr. McBride?

A. We did.

Q. Let me show you what we have marked as Z-15.

1900

Do you recognize that?

A. I do.

Q. What is that?

A. This is a letter from Mr. McBride to Mr. Messman dated
June the 6th, 2003, that Mr. Messman received, my
recollection is, the morning of June the 6th.

MR. ACKER: I move for the admission of Z-15, Your
Honor.

MR. SINGER: Again, this is already in evidence,
but we have no objection.

THE COURT: Z-15 will be admitted.

(Defendant's Exhibit Z-15 was
received into evidence.)

BY MR. ACKER

Q. In this letter did Mr. McBride make demands of Mr.
Messman and Novell?

A. Yes, he made numerous demands, outlined principally in
the second half of the letter.

Q. If we could scroll down, you are referring to the
numbered bullet points?

A. The paragraph that is prior to the numbered bullet
points, as well as to the numbered bullet points.

Q. Let me read it first and then you can explain what
impact this had on the company.

A. Sure.

1901

Q. SCO will hold a press call today at 11:00 a.m. Eastern
Standard Time to clear up the matter so that our
shareholders and customers are fully aware of SCO's rights
with respect to the UNIX copyrights. You have time before
that call to take the following corrective action in order
to possibly mitigate any liability on the part of you, Jack
Messman and Novell to SCO, and to your own shareholders for
your false and groundless accusations.
What was your reaction and what were the allegations
that Mr. McBride was making toward Novell in his letter on
the morning of June the 6th?

A. In the previous portion of the letter Mr. McBride
alleges that our release of the press release on May 28th
violated the United States securities laws. As you can
imagine, as the general counsel of the company that type of
allegation made against the company that I was the general
counsel of was taken quite seriously, because those laws are
laws that lawyers and companies spend a lot of time making
sure that we comply with.
The assertion by Mr. McBride that our company and our
C.E.O. were violating U.S. securities laws I thought was
outrageous and unsupported by the facts and circumstances.

Q. What if any impact did the fact have that Mr. McBride
was going to hold a press conference at 11:00 that day have?

A. I felt somewhat -- I guess I would say our company felt

1902

pressed by Mr. McBride. He made these demands that are
outlined in the lower half of this letter essentially saying
that unless you comply with the demands that I am making of
you, and the implication to me, the strong implication was
that he would be making references to these allegations
about violations of U.S. securities law in his call at
11:00. That is how I read this.

Q. Did you decide that you needed to respond?

A. Yes. I decided that I needed to respond very quickly.

Q. What was the nature of your response that you thought
was appropriate?

A. I wrote a letter back to Mr. McBride as quickly as I
could. The letter addressed two subjects. One was these
allegations that he had made against our company regarding
securities laws violations. The other related to a
commentary on the fact that an executed copy of amendment
number two had been found.

Q. Let me show you what we have marked as Exhibit Y-15.

MR. ACKER: This has been admitted, Your Honor, as
SCO Exhibit Number 97.

BY MR. ACKER

Q. Take a look at the letter, Mr. LaSala.
First let's take a look at your letter on June 6, 2003.
You wrote I have received your letter to Jack Messman with
respect to Novell's May 28th press release. For your

1903

information, Novell today has issued a press release with
respect to amendment number two. A copy is attached for
your ease of reference.
Your letter contains absurd and unfounded accusations
against Novell and others, coupled with a veiled threat to
publicly state those allegations in a SCO press release call
to be held at 11:00 a.m. Eastern Standard Time.
What allegations, absurd and unfounded accusations were
you referring to in your letter back to Mr. McBride?

A. That paragraph --

THE COURT: Just a moment.

MR. SINGER: Excuse me. This was also a subject
that was objected to as privileged in his deposition, page
40, line 22.

MR. ACKER: This letter was the subject of pages
of deposition testimony. He was asked directly about all of
this in his deposition and gave the answers that he is about
to give, Your Honor.

THE COURT: Mr. Acker, take a look at what
Mr. Singer has.

MR. ACKER: Page and line, please.

MR. SINGER: Page 40, line 1, May of 2007, through
page 41, line 3.

MR. ACKER: I'm sorry?

MR. SINGER: Page 40, line 1, through page 41,

1904

line 3.

MR. ACKER: This has nothing to do with this part
of the letter.

MR. SINGER: It is the June 6 press release.

THE COURT: He is asking about the letter.

MR. SINGER: If you're drawing a distinction
between the letter and the attached press release, and I
think the objection was to the press release --

MR. ACKER: Well, as to the press release, I know
that there were pages of testimony about the press release,
Your Honor. If you're going to make an objection regarding
the press release, we'll have to have a discussion about --

THE COURT: Go ahead. You asked him a question
about the letter. Go ahead and ask the question.

Do you want the question reasked, Mr. LaSala?

BY MR. ACKER

Q. When you were talking in your letter about the absurd
and unfounded accusations, what were you referring to, Mr.
LaSala?

A. This was a reference to Mr. McBride's allegations that
Mr. Messman, the C.E.O. of Novell, and Novell itself had
violated U.S. securities laws.

Q. If we could turn to the next page, you also put out a
press release on that day?

A. Yes, we did.

1905

Q. Is that what we're looking at now?

A. Yes.

Q. In that press release Novell stated in a May 28th
letter to SCO, Novell challenged SCO's claims to UNIX patent
and copyright ownership, and demanded that SCO substantiate
its allegations that Linux infringes SCO's intellectual
property rights. Amendment number two to the 1995
SCO-Novell asset purchase agreement was sent to Novell last
night by SCO.
That was true, correct?

A. Yes.

Q. That was the first time to your knowledge anyone at
Novell had seen an executed copy of amendment two?

A. Yes.

Q. To Novell's knowledge this amendment is not present in
Novell's files.
Do you see that?

A. I do.

Q. When this press release went out on June 6, 2003, did
you also believe that statement to be true?

A. Yes, I did.

Q. Did you later find out that, in fact, there was a copy,
an executed copy of amendment number two at Novell?

A. I later found out that there was an executed copy of
amendment number two at Novell.

1906

Q. Was that located before or after this press release
went out?

A. To the best of my knowledge after this press release
went out.

Q. So despite your instructions to your legal team to go
and find it, they were not able to locate it before June 6,
2003?

A. That is correct.

Q. Then you wrote and the press release states the
amendment appears to support SCO's claims that ownership of
certain copyrights for UNIX did transfer to SCO in 1996.
Correct?

A. Yes. That is what the press release says.

Q. What did you mean by that statement?

A. Well, I meant that on first blush, the first reading of
the amendment, a hurried reading of the amendment that the
amendment appeared to support claims of transfer of
ownership of copyrights.

Q. Upon further reflection what was your conclusion about
whether it did or did not?

A. My conclusion was that it did not.

Q. Why did Novell put this out to the public? Why did
Novell do this?

A. Again, I think there were two motivations for Novell
putting this out to the public that morning. The first we

1907

have talked about, those allegations that Mr. McBride had
leveled against us, and we felt it important to respond to
him and we did that, so that he would refrain from saying
that our company had violated the securities laws on his
11:00 call that morning.
Perhaps more importantly with respect to the ownership
issue of the copyrights, we were getting -- we, the company,
and colleagues of mine in the company were getting calls
from the press that morning, asking us for comments on the
fact that SCO had found and identified amendment number two,
and that SCO was taking the position that amendment number
two cleared up the question of ownership of copyrights.
Apparently someone had leaked that to the press, and we
were getting numerous calls that morning, and we felt
compelled to be responsive to those, again, particularly in
light of the fact that Mr. McBride had scheduled an 11:00
call that morning. So we wanted to get something out and we
needed to do it quickly.

Q. What was the plan in place going forward after the June
6th, 2003 press release to determine the impact, if any, of
amendment number two on the asset purchase agreement?

A. Well, my colleagues and I set about to best understand
as we could amendment number two in the context of the
entirety of the asset purchase agreement. We spent, as you
might imagine, a considerable amount of time working on

1908

that.

Q. Let me show you what has been marked as F-16. Let me
show you F-16, and this has been admitted as SCO exhibit, I
believe, 672.
Do you recognize that letter?

A. Yes, I do.

Q. Can you tell the ladies and gentlemen of the jury what
it is?

A. Well, this is a letter from me to Mr. McBride dated
June 9th 2003. In it I advise Mr. McBride of what Novell's
rights are under Section 4.16-B of the asset purchase
agreement. It was written in furtherance of the letter that
we had sent to Mr. McBride on May the 28th. In this letter
we tell Mr. McBride that we will be, again, pursuant to our
rights under the asset purchase agreement, that we will be
directing SCO to waive any right that it may claim to
terminate an I.B.M. SVRX license.

Q. Prior to putting out this letter asking SCO to waive
its claims with respect to SVRX licenses, I.B.M.'s SVRX
license, had you had any other conversations with anyone
from I.B.M.?

A. Yes.
To be clear, this letter merely tells SCO that it
should waive its claims to terminate I.B.M.'s SVRX licenses.
Yes, I did have a conversation with someone at I.B.M. prior

1909

to this letter going out.

Q. Do you remember approximately when that was?

A. It would have been between -- I think it was in early
June, between the time of the May 28th letter and the time
of this letter.

Q. Who participated in the call?

A. The participants in the call were myself, Mr. Rosenberg
from I.B.M., I believe at the he time was the general
counsel of I.B.M., and Mr. Marriott, who was I.B.M.'s
outside counsel, and Mr. Michael Jacobs from Morrison &
Forester representing Novell, so the four of us participated
in the call.

Q. What was the substance of the call?

A. The substance of the call, again, was Mr. Marriott
explaining to us his view of how the asset purchase
agreement worked, and asking that we consider waiving all
claims that SCO had made or might make against I.B.M. with
respect to I.B.M.'s SVRX license.

Q. How did you and your counsel respond?

A. Mr. Jacobs responded on my behalf and he said to the
I.B.M. lawyers that, you know, we are in the process of
reviewing these documents. We have taken a careful look at
them. While the request was made that Novell waive all
claims that SCO might make, that we would look at each on a
case by case basis and make our own determination and act

1910

accordingly. If we felt that the interpretation that I.B.M.
was suggesting was the correct one, that then we would act
in that way, and if we felt it was not correct, then we
wouldn't.

Q. Was that analysis done?

A. That analysis was done.

Q. Did that result in this letter on June 9th?

A. It did.

Q. Can you explain to the ladies and gentlemen of the
jury, because it has been a little confusing, exactly what
it is that you're asking or directing that SCO do in this
letter and what provisions of the A.P.A. you believe gave
you, that is Novell, the right to do so?

A. We are relying on an important provision of the asset
purchase agreement that reserved to Novell certain rights
with respect to existing SVRX licenses. Novell had a
continuing economic interest in those licenses. We had been
told and had learned that SCO had put I.B.M. on notice that
it, SCO, was going to terminate that license because of the
assertion that it, SCO, was the owner of the copyrights.
Now, Novell had realized substantial economic benefit
from this license that we had entered into with I.B.M. in
the mid nineties, is my recollection, and we had been paid
about $10 million by I.B.M. for a fully paid up irrevocable
perpetual license, and --

1911

Q. Let me stop you there. When you use those words, fully
paid up irrevocable license, what does that mean to you?

A. It means they got a license to SVRX code forever, and
that they would owe us no further money, that it was paid
up, fully paid up at that time, and that the license could
not be revoked by Novell.

Q. What was your understanding of what SCO was attempting
to do in this time frame?

A. SCO, my understanding is, put I.B.M. on notice that it,
SCO, was telling I.B.M. that it planned to terminate that
license, and to do so by a date certain, which I believe was
June the 13th of 2003.

Q. What if any impact did you believe that that step, the
termination of the I.B.M. license, would have on Novell's
business interests?

A. Well, that act by SCO could have significant negative
implications for Novell. As I said, I.B.M. had paid Novell
about $10 million. If I.B.M. was going to have its license
revoked by SCO, then it was conceivable that I.B.M. might
seek to recoup its payment to us, the $10 million that it
had paid us for its irrevocable license. That was a concern
to us.

Q. Why is it that you made the decision to direct SCO to
waive and not terminate the I.B.M. license?

A. Well, we have that right under 4.16-B of the asset

1912

purchase agreement, that is the rights related to existing
SVRX licenses at the time of that agreement, and we
controlled and retained the right to direct SCO to waive any
claim that it might make against any of those licensees. I
trust you can understand why we would do that, because we
had an economic interest in those licenses, and if SCO was
going to seek an amendment or a waiver or a revocation of
licenses, it was in our interest to be sure that they
couldn't do that and that they didn't do that.
This was something upon my reading of the contract that
strongly indicated that the parties had thought that through
and had arranged the contract that way for that purpose.

Q. Was this done, this asking of SCO to waive its claim
against I.B.M. or to not terminate its license, was that
done in order to harm SCO or just to protect Novell's
business interests?

A. No. Again, we had no interest in harming SCO. We were
looking out for Novell's business interests. In this case
there was at least $10 million at stake, and I could imagine
a claim coming to Novell seeking not only $10 million, but
$10 million plus, you know, ten year's of interest. This
was a concern.

Q. Let me show you another letter that you wrote on June
26, 2003.

A. June 24th?

1913

Q. I'm sorry. June 24th, yes.

THE COURT: What is this marked as?

MR. ACKER: S-16.

THE COURT: Has a version of this already been
admitted?

MR. ACKER: I don't believe so, Your Honor.

MR. SINGER: We are not certain that this has
previously been admitted. We do not have an objection.

MR. ACKER: I move the admission of S-16. Your
Honor.

THE COURT: S-16 will be admitted.

(Defendant's Exhibit S-16 was.
received into evidence.)

BY MR. ACKER

Q. On June 24th you wrote another letter to Mr. McBride,
correct, Mr. LaSala?

A. I did.

Q. Can you sum up for the ladies and gentlemen of the jury
what you're asking from SCO in this letter written on June
24, 2003?

A. Well, essentially we're asking SCO for copies of the
SVRX licenses that it announced to the public that it had
entered into with third parties.

Q. If we could go down to the paragraph that begins with
amendment number two --

1914

A. Yes.

Q. You wrote, amendment number two to the asset purchase
agreement reinforces the restrictions on SCO providing that
Novell, as well as SCO, has the right to approve any
transaction with an SVRX licensee which concerns a buy out
of any such licensee's royalty obligation.
Do you see that?

A. I do.

Q. What is it that you're asking for from SCO? In this
letter, simply put, what were you asking him?

A. Copies of recent licenses that they had entered into
with Microsoft and another at that point unnamed party,
because we felt that we had an economic interest in those
licenses.

Q. Why did you think you had an economic interest?

MR. SINGER: I object, Your Honor. I don't think
these are issues that are before us in this case.

THE COURT: I'll overrule the objection.

BY MR. ACKER

Q. Why did you make this simple request of SCO?

A. Because consistent with our rights in this Section
4.16-B that we have been talking about, SCO did not have the
right to enter into new SVRX licenses, except in some
limited circumstances. We learned from their securities
filings that they had in fact entered into new SVRX

1915

licenses. We thought that to the extent that they had done
so, that we might have an economic interest in whatever
license arrangement they had made.

Q. How would that economic interest -- where would that
come from?

A. It would come from royalties that these parties would
pay under the license to SCO, and arguably we thought
rightfully would belong to us.

Q. Why is it that Novell would be entitled to royalties
that had been paid to SCO?

A. Because SCO didn't have the authority to enter into
these new SVRX license, and to the extent that they had done
so our view was that, you know, those proceeds from those
SVRX licenses belong to us because of our ownership position
with respect to the copyrights.

Q. Was that part of the --

MR. SINGER: Your Honor, may we approach?

THE COURT: Yes.

(WHEREUPON, a bench conference was begun.)

MR. SINGER: Your Honor, we filed a motion in
limine that dealt with the fact that the determination of
these licenses and the 2.5 million to Novell -- in other
words, all events relating to the 2008 trial shouldn't come
in here and that motion in limine was granted, if I recall.
That is exactly the line of questioning that Mr. Acker is

1916

getting into, the interpretation and whether the Microsoft
and Sun agreement or SVRX licenses and royalties. This
doesn't bear on copyright and ownership issues. It goes
right into the areas which this Court --

MR. ACKER: There is a claim for specific
performance and we have a defense to that claim for specific
performance and material breach of the A.P.A. Those are
Court issues that the Court is to decide. We attempted to
not have those come in front of the jury and be issues and
SCO didn't want to. They wanted all this to come in before
the jury. That is why Mr. LaSala is here and this is the
testimony that we're providing.

THE COURT: Does this go to the issue of unclean
hands?

MR. ACKER: And it goes to the issue of a material
breach and preventing them from moving forward on this
specific -- both issues.

MR. SINGER: We had also filed, and I believe the
Court ruled in our favor, that there was nothing here -- a
breach by virtue of this provision that would affect our
rights with regard to copyright ownership, and there were
motions in limine that were argued and the Court ruled on
this subject, and the mere fact that he is asserting that
this relates specifically to performance does not create a
predicate for getting in or bringing in that part of the

1917

case that was already decided and adjudicated now into this
proceeding.

They argued that we couldn't raise issues here
that we had breached, and the Court said, no, it did not
find that our failure to pay over those royalties
constituted a basis to relieve them from their obligations
that are at issue in this case, and --

MR. ACKER: If we can have a stipulation that Mr.
LaSala's testimony and the other witness's testimony on this
issue from the bench trial would be admissible here for the
issues that the Court is to decide, I'll move on to another
issue.

THE COURT: Say that again.

MR. ACKER: If we can have a stipulation that the
testimony from the bench trial from Mr. LaSala and other
witnesses on these issues, that is like Sun and Microsoft,
the licenses, and the failure of SCO to provide those
licenses to Novell when requested in 2003, then if they'll
agree that the Court can consider that and decide those
issues, then I don't need to go into it with Mr. LaSala.

MR. SINGER: We'll agree that you may consider it
in that fashion on those issues.

THE COURT: By way of reference to those parts of
the transcript in your proposed findings of fact and
conclusions of law?

1918

MR. SINGER: Yes.

MR. ACKER: Yes.

THE COURT: That is what we'll do.

MR. SINGER: So no further discussion of these
subjects with Mr. LaSala or other witnesses?

MR. ACKER: Not in front of the jury.

MR. SINGER: Okay.

(WHEREUPON, the bench conference was concluded.)

BY MR. ACKER

Q. Let me show you another letter, sir, T-16, which has
been admitted as SCO 678.
Do you recognize that letter?

A. I do.

Q. If we could highlight the first paragraph.
On June 26th you wrote to Mr. McBride, Mr. LaSala, and
you write to address SCO's recent statements to the press
and securities filing in your amended complaint in the
I.B.M. case and other materials, that SCO owns all of the
intellectual property rights associated with UNIX and
UnixWare. For example, your June 6th press release states
that SCO owns all rights to the UNIX and UnixWare
technology, and the description of your SCOsource program on
your web site states that SCO owns the patents and
copyrights and core technology associated with the UNIX
system.

1919

Go to the next paragraph. Then you write very clearly,
SCO's statements are simply wrong.
Do you see that?

A. Yes.

Q. Now, why is it on June 26, 2003 that in this letter to
Mr. McBride that you're referencing the public statements
since June 6th, and you're telling him his statements are
wrong.
Why do you do that?

A. Well, it had become a bit of a practice of ours to try
to rebut at every opportunity that we could every
misstatement that Mr. McBride made, public misstatements
that Mr. McBride made about the ownership issue. I must
tell you that it was a challenge to keep up. I'm sure that
we missed some occasions, but in this instance we were
writing in furtherance of the June 6th letter, and we were
doing so in response to continued public statements being
made by SCO that it was the rightful owner of the
copyrights. I would remind you that we were doing this in a
private way. We were sending private letters back to him
and he was making public statements.

Q. Why did you feel it was necessary to tell Mr. McBride
privately that his statements about ownership were wrong?

A. Well, we wanted it to be clear to Mr. McBride that he
should not be relying on anything that we had previously

1920

said with respect to the ownership of the copyrights in a
way that would permit him to make -- continue to make
assertions that SCO was the owner of the copyrights. That
is what this letter did.
It was, again, to put Mr. McBride on notice that we
believed strongly that we were the rightful owners and that
they were not, and that to the extent that they may have
been relying on something that we had previously said on
June the 6th, that they should not so rely on that. To be
clear, we believed that their statements were wrong.

Q. In telling Mr. McBride on June 26th in a private letter
that you thought that he was wrong about ownership, were you
intending somehow to harm SCO?

A. No. Again, we had no interest in harming SCO. Our
desire was to look out for Novell's business interests, and
this certainly -- this correspondence was certainly in
furtherance of that.

Q. I'm going to show you what we have marked as D-18.

MR. ACKER: This has been admitted as SCO Exhibit
105, Your Honor.

BY MR. ACKER

Q. Do you recognize that letter, sir?

A. Yes, I do.

Q. Is this a letter that you wrote to Mr. McBride on
August 4, 2003?

1921

A. Yes, it is.

Q. Let's take a look at the first paragraph. This letter
is in furtherance of my letter of June 26th, 2003 concerning
ownership of the copyrights in UNIX. It follows your recent
announcement that SCO has registered its claim to copyrights
in UNIX System V with the U.S. Copyright Office.
Was that something that Novell became aware of in early
August of 2003?

A. Yes, it was.

Q. Then you wrote in the second paragraph, we dispute
SCO's claim to ownership of the copyrights. The asset
purchase agreement in Schedule 1.1-B contains a general
exclusion of copyrights from the assets transferred to Santa
Cruz Operation. Amendment number two provides an exception
to that exclusion, but only for copyrights required for
Santa Cruz Operation to exercise its rights with respect to
the acquisition of UNIX and UnixWare technology.
Then you continue in the third paragraph, in other
words, under the asset purchase agreement and amendment
number two, copyrights were not transferred to Santa Cruz
Operation unless SCO could demonstrate that such a right was
required for Santa Cruz Operation to exercise the right
granted to it in the A.P.A. Santa Cruz Operation has never
made such a demonstration, and we certainly see no reason
why Santa Cruz Operation would need ownership copyrights in

1922

UNIX System V in order to exercise the limited rights
granted SCO under the A.P.A., nor is there any reason to
think that a transfer of the copyrights required for SCO to
exercise its A.P.A. rights necessarily entails the transfer
of the entire set of exclusive rights associated with
particular copyrighted computer programs.
Then in the final paragraph to Mr. McBride you wrote
unless and until SCO is able to establish that some
particular copyright right is required for SCO to exercise
its rights under the A.P.A., SCO's claim to ownership of any
copyrights in UNIX technologies must be rejected, and
ownership of such rights instead remains with Novell.
Do you see that?

A. Yes, I do.

Q. Was that your belief of how, if at all, amendment
number two impacted the A.P.A. in August of 2003?

A. Yes, it is.

Q. Is that still your belief today?

A. Yes, it is.

Q. Did you convey that belief in no uncertain terms to Mr.
McBride on August 4th, 2003?

A. Yes, we did. With this letter we think we accomplished
that.

Q. Did you do that publicly or privately?

A. This again was a private letter.

1923

Q. Why did you take that step? Why did you write Mr.
McBride this letter on August 4, 2003 and tell him what
Novell's position was under the asset purchase agreement as
amended by amendment number two?

A. Because SCO had taken yet additional steps in a very
public fashion to assert its ownership of the copyrights,
and it did so by seeking to register its copyrights at the
U.S. Copyright Office. That is public.
As I mentioned in one of my previous answers, we
thought it is important to continue to put SCO on notice
that we disagreed with the public positions they were
taking. We did so repeatedly throughout the course of the
summer. This was the latest example of that effort on our
part.

Q. Did Novell itself take steps to register the UNIX
copyrights at some point?

A. Yes, we did.

Q. Explain that.

A. At some time later, and I believe it was in September,
but I may not have the time frame exactly right, Novell
chose to register the copyrights to SVRX and to UNIX at the
copyright office itself. We, in fact, completed that
registration.

Q. And with those steps and in writing Mr. McBride and
telling him Novell's position regarding the asset purchase

1924

agreement and registering the copyrights, was that done in
an attempt to harm SCO or was that done to protect Novell's
business interests?

A. No. It was not done at all to harm SCO. Again, it was
done in furtherance of these business interests of Novell
that we have been talking about.

Q. Let me show you another letter F-21. It has been
admitted as SCO's Exhibit 243.
Do you recognize that letter?

A. Yes, I do.

Q. There is no date on the first page, but if we go to the
second page you can bring up the date.

A. Yes.

Q. This is a letter that you wrote to Mr. Tibbitts on
October 7th, 2003, right?

A. Yes.

Q. Why are you writing this letter, F-21, or SCO Exhibit
243 to Mr. Tibbitts in early October of 2003?

A. Because it had come to our attention that SCO was
taking the position that code development by I.B.M. or
licensed by I.B.M. from a third party, which I.B.M. then
incorporated into its version of Linux, could be subject and
would be subject to a license effort by SCO against I.B.M.
for that code that I.B.M. had developed on its own.

Q. Boiling it down, what are you saying?

1925

A. We are essentially saying to Mr. Tibbitts in this
letter that the I.B.M. code that it had developed and
contributed to its variant of UNIX was not subject to claims
of ownership by SCO, and we take him through in some detail
our rationale for that.

Q. Then if you take a look at the final paragraph of the
letter you write, accordingly, pursuant to Section 4.16 of
the asset purchase agreement, Novell hereby directs SCO to
waive any purported right SCO may claim to require I.B.M. to
treat I.B.M. code itself as subject to the confidentiality
obligations or use restrictions of the agreement.

A. Yes.

Q. Do you see that?

A. Yes.

Q. Why were you doing this?

A. Well --

Q. What was in Novell's business interest to do this?

A. Again, if SCO had the ability to allege a breach of
contract against I.B.M. or any other user of SVRX code,
which it then developed its own code and built on top of
that basic code, if SCO had the ability to say that that
newly created code was subject to a confidentiality
agreement, then SCO could claim a breach of that agreement,
and that has a further potential to disrupt the business
relationships that we had with I.B.M. and others.

1926

We'll see I believe in a moment that there is other
correspondence regarding other companies, and it was in our
interest to again put SCO on notice that it didn't have this
right to do this. This was one more attempt in our view by
SCO to further disrupt the Linux business. As I have
described, we had a real keen interest in that business,
because of our participation in it and our entry into it,
and the investments that we made in it. Again, this was an
instance where it came to our attention that SCO was making
these types of claims, and in this case I believe it was a
breach of contract claim against I.B.M.

Q. Were you doing this in order to hurt SCO or to protect
Novell's business interests?

A. No. Again, not to hurt SCO, but to protect Novell's
business interests.

THE COURT: Mr. Acker, look for a good time for us
to take our recess.

MR. ACKER: This is a good time.

THE COURT: Ms. Malley.

(WHEREUPON, the jury leaves the proceedings.)

THE COURT: Anything, counsel?

MR. SINGER: No, just perhaps the question how
much longer --

MR. ACKER: I would say less than 30 minutes, Your
Honor.

1927

THE COURT: Okay.

Let's take 20 minutes, counsel.

(Recess)

***** Part 3 *****

THE COURT: Counsel, let me explain, on the
jury instructions and verdict form that you were just
given, I would like any response to it by 8:00 o'clock
Wednesday morning. And I will decide, thereafter,
whether or not we actually have to have a jury
instruction conference or whether or not -- whether, if
you disagree with some, we'll determine whether or not we
have a jury instruction conference or whether or not I
will rely upon your written objections as you create in
the record for the instructions, okay? Thank you.

If we're ready, Ms. Malley.

MR. ACKER: We're set.

THE COURT: How long do you think it will be
reasonable for the findings of fact and conclusions of
law?

MR. JACOBS: Two weeks, Your Honor, after the
jury verdict is entered.

THE COURT: Well, there's a thought here.
Number 1, I would like it as soon as possible, just
because I want my memory to be refreshed, but, on the
other hand, the more time you take, probably the
greater -- the better your product will be. So, give me
what you think would be reasonable to meet both of those.

MR. SINGER: We were thinking 20 days.

MR. JACOBS: That's fine.

1928

THE COURT: Okay. Plan on 20 days, then,
counsel. Thank you.

MR. JACOBS: Just to be clear on the form of
this, then, the findings of fact and conclusions of law
will, in a sense, be a self-contained argument with
reference to supporting evidence, including, as we
discussed, the bench trial record?

THE COURT: Yes.

MR. JACOBS: Great.

MR. SINGER: To be exchanged simultaneously?

THE COURT: Exactly. And in not just written
form but also submitted electronically so that we can
manipulate it, please.

MS. MALLEY: All rise.

(Jury btought into the courtroom.)

THE COURT: Go ahead, Mr. Acker.

MR. ACKER: Thank you, Your Honor.

Q. BY MR. ACKER: Mr. LaSala, let me show you what
we have marked as G-21 and ask if you recognize that
letter?

A. Yes, I do.

Q. And is that a letter that you wrote to
Mr. Tibbitts on October 7, 2003?

A. Yes, it is.

MR. ACKER: I move for admission of G-21, Your

1929

Honor.

MR. SINGER: No objection.

THE COURT: It will be admitted.

(Novell Exhibit G-21 received in evidence.)

Q. BY MR. ACKER: Can you -- before we take a look
at the specific provisions of the letter, could you tell
the ladies and gentlemen of the jury, in sum, what you
were doing in this letter to Mr. Tibbitts?

A. This letter to Mr. Tibbitts is very much in the
vein of a letter we spoke about just before the break
concerning IBM code that had been developed by IBM, and
this letter concerns SCO's threat to terminate the
license that a company called SGI has with respect to
SVRX by October 14, if SGI did not correct alleged
breaches of the license agreement that SCO claimed it
made.

Q. And, to your knowledge, is there any
relationship between SGI and IBM?

A. To my knowledge, there is no relationship.
They are two totally different companies.

Q. And how did you; that is, Novell, become aware
of SCO's actions toward SGI that caused this letter to be
drafted and sent to Mr. Tibbitts?

A. My recollection is I got a call from the
general counsel at Silicon Graphics, at SGI, advising me

1930

that they had received this letter from Mr. McBride, that
we are talking about, and asking if we would take a look
at a claim that was being made and act appropriately.

Q. And what action did you ask SCO to take?

A. Well, in this letter, we, again, reminded SCO
of Novell's rights under Section 4.16(b), and we asked
SCO -- or we directed SCO to waive any claim that it
might have to terminate SGI's SVRX license.

Q. Did you believe it was in Novell's business
interest to do so?

A. Yes, I did.

Q. Why is that?

A. For the same reason that we took the action
with respect to IBM, because we believed that SCO was
making these claims, and, in this case, with respect to
SGI, in a way or under circumstances in which it did not
have the rights to do so. And, if it were allowed to do
this, were allowed to terminate this license, it could
have harmed Novell's business interest, again, by
disturbing, disrupting the Linux market, which is a
market we were -- we had, by this time, gotten very much
into.

Q. And when you say "by this time," by October of
2003, what steps had Novell made to enter into the Linux
market?

1931

A. We had taken numerous actions, going back to
2002, to transition our company to take -- to participate
in the Linux business. Perhaps the two most significant
things that we did were, in August of 2003, we acquired a
Linux company called Zimion. That was in August, 2003.
And, by this time, October 7, 2003, we were in
negotiations to acquire the second leading distributor of
Linux code in the world, a company called SUSE Linux,
which was a German -- a German company.

Q. And did IBM subsequently make an investment in
Novell with respect to Novell's acquisition of SUSE
Linux?

A. It did, yes.

Q. And can you explain that for the jury,
please?

A. Sure. When Novell acquired this company called
SUSE Linux in Germany, we completed the acquisition in
November, and our CEO, Mr. Messman, was really looking
for a marketplace affirmation of the significance of that
transaction. And it's important to appreciate that our
acquisition of this company was quite a significant deal
in the industry and for Novell because it really put
our -- you know, our commitment to Linux on the table. I
think the acquisition was about $210 million.

So, what we were looking for was an affirmation

1932

by a leading market player. In this case, it was IBM.
And what our CEO requested that IBM do was to make an
investment in Novell and then to publicly announce that
they had made that investment. And we viewed that as
a -- if you will, a stamp of approval or an endorsement
by a leading technology company with respect to the
significance of Novell buying this Linux distribution
company.

Q. Was there any relationship between the actions
that Novell took with respect to SCO and IBM's decision
to purchase Novell stock?

A. No.

Q. Let me show you one final exhibit, X-22.

A. Twenty-three?

Q. I'm sorry. X-23. Do you recognize that?

A. Yes, I do.

Q. And what is it?

A. This is a press release that Novell issued on
December 22, 2003, wherein we assert publicly our belief
that we own the copyrights to UNIX, and we include
correspondence between Novell and SCO in a link so that
the reader can access that correspondence on -- between
SCO and Novell as it relates to the question of ownership
of copyrights.

MR. ACKER: All right. I'd move for admission

1933

of X-23, Your Honor.

MR. SINGER: This is already in evidence as a
SCO exhibit.

THE COURT: It will be admitted.

(Novell Exhibit X-23 received in evidence.)

Q. BY MR. ACKER: Let's take a look at that.

A. Okay.

Q. On December 22, the press release reads:

"Novell believes it owns the copyrights in
UNIX."

Do you see that?

A. I do.

Q. And was that true as of December 22, 2003?

A. Yes.

Q. And you still have that belief today?

A. Yes.

Q. "And has applied for and received copyright
registrations pertaining to UNIX consistent with that
position."

Is that also true as of the December 22, 2002?

A. Yes.

Q. "Novell detailed the basis for its ownership
position in correspondence with SCO."

Do you see that?

A. I do.

1934

Q. And is that a reference to your June 26 and
August 4 letters to Mr. McBride?

A. Yes.

Q. And were those letters attached to this link so
that readers could view it?

A. Yes.

Q. And then you wrote:

"Copies of our correspondence and SCO's reply
are available here."

Do you see that?

A. I do.

Q. Also, in addition to your letters to
Mr. McBride on August 4 and June 26, did you also attach
Mr. Tibbitts' reply to those letters?

A. We did.

Q. Why?

A. Well, we thought it was important to really
allow the public to see the communication on the
substance of a very important issue, the ownership of the
UNIX copyrights. And, for the first time, as I alluded
to prior to our break, we had Mr. McBride out there, over
the course of, you know, almost an entire year, making
public statements as to SCO's ownership of UNIX. And, as
we have gone through here, we were making -- we were
sending private letters back to Mr. McBride and other

1935

representatives at SCO correcting them at every turn,
where we had the opportunity.

And we finally got to the point where we,
again, felt it was important to allow the public to see
both sides of the argument so that they could make some
judgments, themselves, about this very important question
because all they were seeing, as a matter of publicity,
were the statements and comments that Mr. McBride and his
colleagues were making about ownership.

And, all along, we were taking -- as we
recounted, we were taking every reasonable opportunity we
could to let them know that we thought that those were
wrong. So we finally got to a point where we said to
ourselves, "Hey, look, we've got to get our position out
there, let the public see it, let the public see the
retort from Mr. McBride or from SCO." And that's why we
did this.

MR. ACKER: I don't have anything else, Your
Honor.

THE COURT: Thank you.

CROSS EXAMINATION

BY MR. SINGER

Q. Mr. LaSala, you testified earlier that Novell
made decisions to waive SCO's rights for Novell's
interests, not those of IBM; is that correct?

1936

A. Yes.

Q. You testified, however, that Mr. Marriott, who
is a lawyer for IBM, asked you to take that action to
waive those rights, correct?

A. Yes. He asked us to take -- to assert our
rights to waive all claims, yes, he did.

Q. Now, you were asked that question at your
deposition in February, 2007, whether IBM had asked
Novell to waive those rights. Do you recall that?

A. Not specifically.

Q. Let's look at your February, 2007, deposition.
And this is going to be page 158, line 1, to 158, line 7.

MR. ACKER: Just a second. I'm sorry. 158,
line 1?

MR. SINGER: Yes.

MR. ACKER: All right.

MR. SINGER: Mr. Calvin, will you play clip 10.

This will be on your screen.

(Video clip played as follows:)

Q. Did IBM ever ask you to direct SCO to take the
steps that Novell directed SCO to take?

A. No.

Q. Do you know if IBM asked anyone at Novell to
take the steps that Novell directed SCO to take?

A. No. I'm not aware that such a thing ever

1937

occurred.

(End of video clip.)

Q. BY MR. SINGER: So, Mr. LaSala, under oath, in
February, 2007, you denied what you've testified here to
today, that IBM asked Novell to take these steps, right?

A. Well, the request that was made, at that time,
was a broader request. It was a request to waive all
claims, is my recollection, by Mr. Marriott, and we, as I
testified earlier, responded in such a way as to say that
we would take a look at that, and we took subsequent
actions related to a more narrowed set of issues than
what was being asked.

Q. Sir, wasn't the very question you were asked in
deposition about the action that Mr. Marriott asked you
to take in not allowing SCO to terminate a license with
respect to UNIX code?

MR. ACKER: Your Honor, that misstates the
video clip, and also there is -- well, I'll do it on
redirect.

THE COURT: Well, I think, in fairness, it was
not clear, from the video clip, what the question was.

MR. SINGER: I would ask clip 9 to be played,
which plays the prior question and answer.

THE COURT: All right.

(Video clip played as follows:)

1938

Q. In what way did you think that the actions
Novell was taking in directing SCO to take certain steps
could be beneficial to IBM?

A. Well, one example is SCO's attempt to terminate
the IBM/AT&T license could benefit IBM, Novell's actions
in relation to that could benefit IBM by preventing that
termination from occurring, and, thereby, had it
occurred, IBM would have been prevented from continuing
to distribute certain code. So, that's one example.

Q. Did IBM ever ask you to direct SCO to take the
steps that Novell directed SCO to take?

A. No.

Q. Do you know if IBM asked anyone at Novell to
take the steps that Novell directed SCO to take?

A. No. I'm not aware that such a thing ever
occurred.

(End of video clip.)

Q. BY MR. SINGER: Mr. LaSala, you see that you
were asked in February, 2007, specifically whether IBM
had asked Novell to take the steps regarding SCO's
efforts to terminate the license that IBM had, right?

MR. ACKER: It misstates the prior testimony,
Your Honor. It wasn't a question.

MR. SINGER: The question has been read.

THE COURT: The jury has read the question.

1939

The jury can decide what was asked.

Q. BY MR. SINGER: Mr. LaSala?

A. My understanding of the question that was asked
in February and the question that you asked me just now
are different. What was -- what was asked of me by you
is whether or not IBM had asked us to take the actions
that we directed SCO to take. And what we were asked by
IBM was whether or not we would waive the claims that SCO
could possibly make against IBM. And what we responded,
at that time, was that we would review the matter and
take actions as we deemed to be appropriate.

So, the subsequent action that we took was
narrower than SCO -- than what was asked -- what you've
asked me about, I believe.

Q. So, are you saying that it is -- that your
testimony in February was correct, that IBM did not ask
you to direct SCO to take the steps that Novell directed
SCO to take with respect to terminating -- to preventing
the termination of the license?

A. I think that's -- what you said I think is
right. And the reason I say that, again, is because my
recollection of the conversation that we had with IBM was
that they asked us to waive all of the potential claims
that SCO might assert against IBM, and we told IBM that
we would look at them on a claim-by-claim basis.

1940

Mr. Jacobs spoke on our behalf at that meeting,
is my recollection.

Q. Well, in fact, Mr. LaSala, in June, 2003,
wasn't there an express request made to you by
Mr. Marriott and Mr. Rosenberg, lawyers at IBM, that you
stop SCO from terminating this license?

A. No.

MR. SINGER: Would you play clip 15, which is
page 115 to -- line 11, to 115, line 22 of the May, 2007,
deposition.

MR. ACKER: Before it's played, Your Honor, may
I look at the clip? I'm sorry. What was the page
numbers?

MR. SINGER: This is page 115, line 11, to page
115, line 22.

MR. ACKER: Your Honor, may we approach on
this?

THE COURT: Yes. Do you want this on the
record?

MR. ACKER: Yes, please.
(Discussion between the Court and counsel out of the

hearing of the jury.)

MR. ACKER: This is the point. Mr. LaSala
testified in his individual capacity as a 30(b)(6)
witness, and this is why I stood up before. I objected

1941

that this is unfair because the exact testimony he gave
today, he testified about in his deposition. They have a
copy of a -- the statement itself, about this
conversation, and Mr. LaSala testified during his
deposition as a 30(b)(6) witness.

So now they are trying to leave the impression
that that testimony was never given during the course of
the deposition. It's totally unfair, and that's exactly
what he's saying in this clip.

MR. SINGER: Well, but what happened first of
all, in February of '07, he denied, as the testimony we
just played, that IBM had a role in what Novell did. In
May, 2007, he admitted that. And now, in his testimony
on the stand, he's saying that, well, they didn't tell me
to waive the rights with code. The clip I'm about to
play specifically says they were to waive the rights with
code. The explanation doesn't make any sense. I'm
entitled to do that.

MR. ACKER: That's the exact point. When he
stood up there and accused Mr. LaSala -- and I disagree
about your characterization about any inconsistencies so
far -- but when he accused Mr. LaSala of not providing
that testimony during the deposition, this testimony, it
is exactly the conversation.

THE COURT: Well, I believe he's entitled to

1942

use the depositions to impeach the witness. If you want
to draw the jury's attention to the inconsistencies, you
will be able to do that. If you want to rely on
additional parts of the deposition, you certainly may do
that. But I believe that, again, Mr. Singer is entitled
to use the depositions in this way.

MR. ACKER: As long as he's accurate about
characterizing them. He stands up and says, "you never
made --"

MR. SINGER. I can --

MR. ACKER: Let me just finish. "You never
made these. You never testified during your deposition
about this."

When you know he did. You know he did. It's
an improper question.

THE COURT: Mr. Acker, I believe he has the
right to use the depositions as I have said. I don't
believe it's correct to characterize the nature of the
testimony and draw -- and, in effect, be testifying as to
his inconsistencies. You may point them out, but I don't
think you should, in your questions, be testifying,
trying to draw undue attention to it. Fair enough?

MR. SINGER: Fair enough.

THE COURT: Okay.

(Proceedings continued in open court.)

1943

MR. SINGER: Mr. Calvin, would you play clip
15, which is testimony from the May, 2007, deposition,
page 115, line 11 to line 22.

(Video clip played as follows:)

Q. You say in the second paragraph:

"Mr. Marriott explained that IBM had paid
Novell for a paid-up, irrevocable license through
Amendment X and that SCO was threatening to terminate
IBM's UNIX/AIX license. Mr. Marriott requested that
Novell exercise its rights under Section 4.16(b) of the
APA and waive SCO's claims against IBM. He noted that
the matter was urgent in view of of SCO's threatened
termination date." End quote.

Do you see that language?

A. I do.

(End of video clip.)

Q. Did you give that testimony?

A. Yes.

Q. Would you take a look at SCO Exhibit 530.

MR. ACKER: Could we get a copy?

Q. BY MR. SINGER: Mr. LaSala, is Exhibit 530 a
document which you created in connection with your
deposition in a corporate capacity in May, 2007?

A. Yes, it is.

Q. And does this document summarize testimony --

1944

summarize conversations that you had with Mr. Marriott,
of IBM, and Mr. Rosenberg, of IBM, in June of 2003?

A. Yes, it does.

Q. And, am I correct that, in June, 2003, you had
a phone conversation where you participated on behalf of
Novell, together with Mr. Jacobs, correct?

A. Yes.

Q. Mr. Marriott, who is an outside lawyer for IBM,
participated, correct?

A. Yes.

Q. And, at the same time, a Mr. Rosenberg, who is
an in-house lawyer for IBM, participated, correct?

A. Yes.

Q. And, in that conversation, am I correct that
the IBM lawyers specifically requested that Novell take
action, under its agreement, to waive SCO's claims
against IBM?

A. Yes. SCO's claims against IBM.

Q. And, at that time, the particular -- and,
at that time, Mr. Marriott noted that the matter was
urgent in view of SCO's threatened termination date; is
that correct?

A. Yes, it is.

Q. The threatened termination date was the date
that SCO had given IBM that, if this issue wasn't

1945

resolved, they were going to pull the UNIX license and
say that it had been terminated, correct?

A. That's my understanding.

Q. And you wrote a letter, then, on June 9, 2003,
specifically telling SCO not to do that, right?

A. Not to do what?

Q. Not to terminate IBM's AIX -- IBM's UNIX
license?

A. Yes. I wrote that letter, and not to put too
fine a point on it, that letter related to termination.
The request that we're talking about relates to a waiver
of SCO's claims. So, that was one of the claims. But
this letter is -- this note suggests there was a broader
request than the one that was ultimately granted.

Q. Well, in fact, what was requested by IBM was
that you waive SCO's ability to terminate that license,
which IBM, in SCO's view, had breached, correct?

A. I'm not trying to be difficult, but I really
understood the request to be broader than that, and I
think, if you read the notes regarding Mr. Jacob's
response, it --

Q. I'm not asking you about Mr. Jacob's responses,
Mr. LaSala.

A. Okay.

MR. ACKER: Your Honor, Mr. LaSala should be

1946

allowed to answer Mr. Singer's question.

MR. SINGER: He will have redirect. He can
elicit other things he wants in response.

THE COURT: That's correct, Mr. LaSala. In
effect, what I'm saying is, please answer the questions
as directly as possible that Mr. Singer may ask you. If
there is additional information that you think is
relevant, Mr. Acker will be able to ask you questions on
redirect to bring those out.

THE WITNESS: Understood.

Q. BY MR. SINGER: Mr. LaSala, in fact, IBM asked
you both to waive all of SCO's claims, right?

A. I understood them to be asking us to waive all
of SCO's claims.

Q. And you did that, correct? You tried to waive
every claim that you had a right to waive or you thought
you had a right to waive?

A. I'm not sure that's the case.

Q. Well, you waived -- you wrote a letter
purporting to waive the claims under the contract
agreement between SCO -- between IBM and AT&T, which SCO
was seeking to exercise rights to, correct?

A. We did write a letter directing SCO to waive
the breach of contract claims in connection with SCO's
allegation that IBM breached the confidentiality

1947

provision.

Q. And Mr. Marriott was also asking you to take
urgent action with respect to the termination that SCO
was seeking to take, the termination action with respect
to their license, correct?

A. He said the matter was urgent. He said the
matter was urgent.

Q. And the matter we're talking about is the
termination of the UNIX license that IBM had, right?

A. Yes.

Q. And, after Mr. Marriott made that request,
that's exactly what you did. You then directed SCO to
waive those rights to terminate that license, correct?

A. We directed SCO to waive the termination of the
IBM license. We did.

Q. Now let's talk about the issue of Novell's
interest that you talked about with respect to having a
$10 million royalty interest. There was a buyout of all
the royalties that IBM had to pay Novell that was done in
1996, correct?

A. That's my understanding, yes.

Q. So there weren't any current royalties between
1996 and 2003 that were being paid by IBM on that
license?

A. They weren't being paid currently. All of

1948

those royalty obligations were paid up in full. We were
making reference to the earlier statement.

Q. Now, you understood that SCO was pursuing a
court suit to determine that IBM had breached its rights
under its contract by disclosing code that shouldn't have
been disclosed, correct?

A. Yes.

Q. And you sought to shortcut that process so,
instead of the Court deciding who was right, IBM or SCO,
Novell was going to just move in and waive those rights
so there wouldn't need to be a court dispute on that,
right?

A. No.

Q. Well, what is the purpose of the waiver, other
than to stop SCO from asserting those rights in court?

A. I think you said we were seeking to shortcut
the court process, and that was not our intention. I
wasn't -- we weren't seeking to shortcut the court
process.

Q. Well, what term would you put on waiving a
party's rights to bring a legal claim in court, other
than shortcutting that process?

A. We were looking out for our interests. As I
said, we had $10 million at stake, and we wanted to make
sure our interests in those were protected.

1949

Q. Let's talk about the $10 million. That's money
that was paid in 1996, correct?

A. I believe that's right, yes.

Q. Let's assume, if the SCO lawsuit had proceeded
on without any waiver and SCO was right, that IBM
breached the agreement, IBM wouldn't be able to demand
back its $10 million from you, would they?

A. Well, I don't know whether they would have
succeeded in doing so, but we had a concern that they
might try to do so.

Q. Well, if they breached the agreement, they
wouldn't be able to successfully get that $10 million
back because they would have been in the wrong. They
would have breached. Correct?

A. I don't know.

Q. You don't know that?

A. Not for certain, no.

Q. And, if it turns out in court that IBM was
right, and SCO was wrong, well then IBM wouldn't have any
right then, either, to ask for the $10 million back from
Novell because they wouldn't have had any right under any
agreement to do so, correct?

A. Well, if IBM had prevailed in that litigation
that you're talking about, I imagine they would not have
come and asked us for the $10 million. That's correct.

1950

Q. And, in fact, at no point did IBM actually ask
you for $10 million back, correct?

A. Not that I'm aware of.

Q. In fact, what happened in November of 2003 is
IBM paid Novell $50 million to facilitate the purchase of
a Linux company, right?

A. No.

Q. No? The $50 million wasn't invested in Novell
for the purchase of SUSE Linux?

A. I'm sorry. You said IBM paid Novell $50
million I think is what you said. And my answer to that
was, no, Novell did not pay $50 million.

Q. They transferred the money to Novell, $50
million, as an investment in Novell for the purpose of
purchasing SUSE Linux, correct?

A. I'm trying to be precise here. It was not
for the purpose. It was not so Novell could purchase
SUSE Linux. And Novell -- excuse me -- IBM did make an
investment of $50 million in Novell. That is true.

Q. With respect to the other waivers that Novell
directed SCO to make, you testified earlier about one
regarding SGI, Silicon Graphics. Do you recall that?

A. Yes.

Q. Are you aware, Mr. LaSala, that Silicon
Graphics issued a public statement that they made a

1951

mistake and put UNIX code in Linux, and then they removed
that code. Are you aware of that?

A. Yes.

Q. Now, with respect to the IBM code, you agree
that you waived rights. You caused Novell to waive SCO's
rights with respect both to IBM and a company called
Sequent that IBM then owned, correct?

A. Yes. That second letter came a bit later.

Q. And you talked about this being irrevocable
rights. Are you familiar with an agreement called
Amendment X that was entered into between the Santa Cruz
Operation and IBM?

A. Yes.

Q. I'd like to show you Exhibit 165, which is in
evidence, I believe, already, as Novell Exhibit 08.

Q. And I would move the admission of SCO Exhibit
165 so this copy is before the Court.

MR. ACKER: No objection, Your Honor.

THE COURT: It will be admitted.

1952

(SCO Exhibit 165 received in evidence.)

Q. BY MR. SINGER: Do you recognize this to be
what we were referring as Amendment X, an amendment
entered into between IBM and Santa Cruz Operation; is
that correct?

A. Yes.

Q. And Novell was a party to that agreement,
correct?

A. Yes.

Q. This was part of resolving a dispute that came
up in 1996, right?

A. That's my understanding.

Q. And, if you turn to page 2 of the agreement,
-- in fact, why don't we start on page 1, with the "No
additional royalties."

Mr. Calvin, if you can blowup the Amendment
Number X, paragraph 1.

And here you see the reference that upon
payment to SCO of the consideration in the section
entitled Consideration, IBM will have the irrevocable,
fully paid-up, perpetual right to exercise all of its
rights under the related agreements, beginning January 1,
1996, with no additional royalty payment.

And it says:

"However, if IBM requests delivery of

1953

additional copies of source code of the --" let's turn
now to the next page -- "of the software product, IBM
will pay certain fees listed on this schedule."

And I'd like to direct your attention to the
next statement:

"Notwithstanding the above, the irrevocable
nature of the above rights will in no way be construed to
limit Novell's or SCO's rights to enjoin or otherwise
prohibit IBM from violating any and all of Novell's or
SCO's rights under this Amendment X to related agreements
or under general patent, copyright or trademark law."

Do you see that?

A. I do.

Q. Were you aware of this when you sought to waive
SCO's rights to proceed against IBM under contract
claims?

A. Yes.

Q. I'd like to go back now to something you
testified to near the start of your direct examination,
your discussions with Mr. McBride regarding copyright
ownership.

Now, is it your testimony that Mr. McBride
specifically said, in your presence, that he wanted
Novell to transfer copyrights to SCO?

A. I don't recall that he used the word

1954

"transfer."

Q. He was seeking a clarification, was he not,
that those rights already existed with SCO, correct?

Q. And you are -- you're not aware of Mr. McBride
having had a copy of Amendment Number 2 at the time of
those conversations, are you?

A. I don't know whether he did or he did not.

Q. But you are aware that there was a document
that was forwarded by SCO to Novell which sought to
clarify these issues. Were you aware of that?

A. I'm sorry. I'm not sure what you are referring
to.

Q. I'd like to show you the last page of SCO
Exhibit 615. Do you recognize this to be a draft
document provided by SCO to Novell?

A. I've not seen this document until now.

Q. You have never seen this document before?

A. I don't recall ever having seen this
document.

MR. SINGER: We would move the admission of the

1955

last page of Exhibit 615.

MR. ACKER: I have no objection, Your Honor, as
long as it's just the last page.

MR. SINGER: The last page.

MR. ACKER: Not the declaration in front.

THE COURT: All right. The last page only?

MR. SINGER: Yes.

THE COURT: Of exhibit 615 will be admitted.

(The last page of SCO Exhibit 615 received in evidence.)

Q. BY MR. SINGER: This was a document sent
for the purpose of clarifying -- well, you have never
seen this; is that right?

A. That's my recollection is that I've not seen
this.

Q. Now, there were discussions in late 2002
between SCO and Novell, where SCO indicated its interest
in licensing UNIX technology for use in Linux; is that
correct?

A. That's my understanding.

Q. At any time between those conversations in late
2002 and June, 2003, did you, as general counsel, ever
directly tell SCO that it could not engage in SCOsource
licensing?

A. No. I don't believe I did.

Q. Did you ever direct others to tell SCO that it

1956

couldn't engage in SCOsource licensing?

A. No.

Q. And, in fact, there were public announcements
in the early part of 2003 which announced that SCO
planned to do that, to engage in that licensing, correct?

A. Yes.

Q. But, instead of telling SCO that, in your view,
they didn't have the rights to do that, you went public
on May 28, 2003, with a press release, right?

A. I'm not sure it was instead of, but we did go
public with the press release on May 28.

Q. Now let's talk about that press release and the
events surrounding that. Now, you joined Novell in 2002
as general counsel, correct?

A. 2001.

Q. 2001. You weren't involved in the negotiation
of the transaction by which the UNIX business was sold to
Santa Cruz, correct?

A. That's correct.

Q. And you had no involvement in the Asset
Purchase Agreement and its negotiation, correct?

A. Correct.

Q. And you never spoke with any of the negotiators
of the deal about these issues, right?

A. Me, personally?

1957

Q. Yes.

A. I did not.

Q. So, you were, however, an individual who
approved the May 28 press release before it was issued,
right?

A. Yes.

Q. You issued a press release which stated that
Novell, not SCO, owned the UNIX copyrights, correct?

A. Yes.

Q. And you testified that you were aware of
Amendment Number 2 in an unsigned fashion before you sent
that press release out, correct?

A. Yes.

Q. And, in fact, I think what you testified to --
and you tell me if I'm wrong -- is that you turned the
company upside down trying to find whether there was a
signed version of Amendment Number 2. Do you recall
that?

MR. ACKER: Objection. That misstates his
testimony.

Q. BY MR. SINGER: Isn't that what you said, sir,
you turned the company upside down trying to find it?

A. I asked Mr. Lundberg to do that.

Q. And the reason you asked Mr. Lundberg, who is
counsel for -- another lawyer for Novell to do that is

1958

that you understood that Amendment Number 2 was very
important because it would clarify the issue as to who
owned the UNIX copyrights, right?

A. If amendment -- no. That's not correct.

Q. So you just asked Mr. Lundberg to turn the
company upside down for a document that didn't matter.
Is that your testimony?

A. No. That's not my testimony.

Q. Now, you had outside counsel involved in the
Asset Purchase Agreement, correct, the Wilson, Sonsini
firm? Are you familiar with --

A. I'm not familiar --

MR. ACKER: Your Honor, objection. There is no
foundation. It's going to call for speculation. He
wasn't around at the time of the Asset Purchase
Agreement.

MR. SINGER: I'll reframe the question.

Q. BY MR. SINGER: Were you aware, Mr. LaSala,
that there was outside counsel representing Novell at the
time of the Asset Purchase Agreement?

A. Yes.

Q. Did you ask that outside counsel whether they
had a copy of the signed version of Amendment 2 before
you went public with your May 28 press release?

A. Did I personally do that?

1959

Q. Did either you or did you ask anyone else to do
that?

A. I did not do that.

Q. Did you ask --

A. And I really don't recall whether I asked
anyone who worked for me to reach out to Wilson, Sonsini
or anyone who worked on that agreement to see if a
copy of -- an executed copy of Amendment Number 2 was
available.

Q. Wouldn't that have been a very logical thing to
do if you were trying to find out whether or not
Amendment Number 2 had been signed before going public
with the press release?

A. Not illogical.

Q. Now, it turned out Amendment Number 2 was
present in Novell's files, correct?

A. That's what I was told, yes.

Q. And it wasn't off-site in some storage, was it?
It was in one of the executive's files, correct?

A. I didn't understand it to be in an executive's
files.

Q. Well, where do you understand the document was
found?

A. My recollection is that it was found in the tax
department.

1960

Q. Now, the tax department is a department of
Novell. It's not like in some warehouse somewhere,
correct?

A. Yes. But -- and I don't know the answer to
this. It could have been in off-site, but it could have
been in the building. I just don't know.

Q. Now, you, never the less, went ahead with the
May 28 press release before having determined whether or
not Amendment Number 2 had been signed, correct?

A. Yes.

Q. And there wasn't any urgency that you had to
come out on May 28. You could have kept looking for that
signed version of Amendment Number 2, right?

A. Yes. We could have. Yes.

Q. But it's your view that it's just a coincidence
that May 28 was also the day that SCO announced its
earnings?

A. There was no connection between the release of
the letter on May 28 and SCO's earnings release date.

Q. Now let's look at the June 6 press release,
which is SCO Exhibit 97. And you recognize that, in this
press release, there is the statement that, to Novell's
knowledge, this amendment is not present in Novell's
files. It turned out it was, correct?

A. Yes.

1961

Q. And you understand that an amendment to
language is very important, that it replaces language
that exists in the agreement before it, correct?

A. It has the potential to replace it, or it could
be additive to it.

Q. Well, in this case, you had seen an unsigned
copy of Amendment Number 2, correct?

A. I had seen an unsigned copy of Amendment Number
2.

Q. And did you understand that, if this had been
signed, then the language replaced the exclusion of
copyrights that you had been looking at in the Asset
Purchase Agreement?

A. I probably didn't give it that much attention,
to be honest were you, the unsigned copy.

Q. On June 6, the press release states that the
amendment appears to support SCO's claim that ownership
of certain copyrights for UNIX did transfer to SCO in
1996, right?

A. Yes.

Q. And your approval indicated that you believed
that this was a true and correct statement?

A. Yes.

Q. And, in fact, even now you recognize that SCO
can get certain copyrights under Amendment 2, that it

1962

doesn't vest ownership of copyrights with Novell; is that
correct?

A. I would agree with -- I think I would agree
with the first part of your statement but not the second
part.

Q. And, is it also true that you have no view,
yourself, as to whether the UNIX copyrights are in fact
required for SCO to conduct its business with respect to
the UNIX and UnixWare technologies it purchased?

A. I am not aware that SCO has a need for the
copyrights to conduct the business that it purchased.

Q. Well, when you were asked that question at your
deposition -- and this is page 45 --

MR. ACKER: Which deposition? February 8,
2000 --

MR. SINGER: February 8, 2007, page 45, line 13
to line 17.

MR. ACKER: Let me have a sec, please. I'm
sorry. Okay.

Q. BY MR. SINGER: Do you recall giving the
following testimony?

Which is clip 3, Mr. Calvin.

(Video clip played as follows:)

Q. Do you have a view, as you sit here today, as
to whether SCO needed any copyrights to exercise its

1963

rights with respect to the acquisition of UNIX and
UnixWare technologies?

A. I don't have a view.

(End of video clip.)

Q. BY MR. SINGER: That was your testimony in
February, 2007, correct?

A. Yes.

Q. Now, you were also familiar with the license
back provisions of the Asset Purchase Agreement, even
before you saw Amendment Number 2, right?

A. Yes.

Q. And, in fact, Novell wouldn't need a license
back of existing technology if it had kept the
copyrights, correct?

A. I don't believe that's correct.

Q. Do you believe that Novell would need a license
back to technology that it wasn't giving anyone?

A. Well, I didn't say that, but there were other
rights conveyed to SCO in the Asset Purchase Agreement,
and there were -- there was additional code to be
developed by SCO as a result of the Asset Purchase
Agreement, to which Novell was going to have a license.

Q. But, in addition to that future code, the
technology licensing agreement also provided a license
back to the existing technology and code that was being

1964

sold at the time of the APA, right?

A. To the existing technology? Everything that
was being transferred to SCO, this is my understanding,
was the subject of a license back from SCO to Novell.

Q. And you agree that this technology licensing
agreement can be read as inconsistent with Novell
retaining the copyrights?

A. Well, that's a possible reading of it.

MR. SINGER: I'd like to play clip 8 at page 95
of his February 8, 2007 deposition, line 10 to 16

MR. ACKER: Wait, if I could just --

MR. SINGER: Certainly.

MR. ACKER: February?

MR. SINGER: Yes. This is page 95, line 10 to
16.

MR. ACKER: Your Honor, I'm just going to
object. It's not inconsistent. They can keep playing
clips, but they are not inconsistent.

MR. SINGER: That's for the jury --

THE COURT: That's for the jury to determine.
I will let the jury decide that, Mr. Acker.

MR. SINGER: Mr. Calvin, will you play clip 8.

(Video clip played as follows:)

Q. Do you think it would be reasonable for
somebody to read the technology licensing agreement as

1965

inconsistent with the reading of the APA, that the UNIX
copyrights were retained by Novell?

Q. BY MR. SINGER: This is part of your letter to
Mr. McBride on June 26, 2003, correct?

A. Yes, it is.

Q. And what you stated in this paragraph was:

"We acknowledge, as noted in our June 6 public
statement, that Amendment Number 2 to the Asset Purchase
Agreement appears to support a claim that Santa Cruz
Operation had the right to acquire some copyrights from
Novell."

That's what you said in your June 26 letter,
correct?

A. Yes.

Q. Now, in fact, that's not what the June 6 public
statement says, is it?

A. I think it is.

Q. Well, let's take a look at it.

1966

A. Okay.

Q. If we can go back to the June 6 press release,
which is Exhibit 97. In the public statement, isn't it
true you didn't say that Amendment Number 2 supports a
claim that Santa Cruz had the right to acquire some
copyrights from Novell, you stated that the amendment
appears to support SCO's claim that ownership of certain
copyrights for UNIX did transfer to SCO in 1996.

Correct?

A. That's correct.

Q. The June 6 statement talks about what had
transferred in 1996. You characterized that, in June 26,
2003, as being a statement about a claim to acquire some
copyrights from Novell, right?

A. To your point, the statements are different.

Q. Now, you also stated, in your June 26 letter,
that upon closer scrutiny, however, Amendment Number 2
raises as many questions about copyright transfers as it
answers.

You put that into the letter, correct?

A. Yes.

Q. And am I correct that, in writing that, you
didn't have anything specific in mind with respect to
what questions were raised; is that right?

A. No. I probably did have things specific in

1967

mind when that was written.

MR. SINGER: Okay. Let's take a look at your
deposition on February 8, 2007, at page 53, line 24, to
54, 09; 55, 04 --

MR. ACKER: I'm sorry. Page 53?

MR. SINGER: Yes. 53, 24 to 54, 09. 55, 04 to
55, 05.

MR. ACKER: 53, line 24?

MR. SINGER: Yes, to 54, 09.

MR. ACKER: Yes.

MR. SINGER: Then 55, 04, to 55, 05.

MR. ACKER: Okay.

MR. SINGER: Mr. Calvin, would you play clip
4.

(Video clip played as follows:)

Q. What did you mean by saying that Amendment
Number 2 raises as many questions about copyright
transfers as it answers?

A. Well, it was made in the context of comments
that Mr. McBride made about the effect of Amendment
Number 2 on the question of copyright ownership. And it
was intended to point out to the reader that it wasn't as
clear as he was suggesting -- to the addressee, that it
wasn't as clear as he's suggesting.

Q. And do you have anything specific in mind?

1968

A. No, I don't.

MR. ACKER: Whoa. Whoa. Your Honor, we need
to approach.
(Discussion among the Court and counsel out of the

hearing of the jury.)

MR. ACKER: He's cut out a whole clip. The
next section was.

"And were there questions that you had in

mind as of the time of this letter that

Amendment Number 2 raised but did not answer."

"Yes. I'm sure -- at the time, I'm sure I

had in mind questions that had been raised that

the amendment didn't answer."

He's cut that out.

MR. SINGER: I don't believe it requires --

MR. ACKER: It would have required, for
purposes of completeness, that it be included.

MR. SINGER: I raised this with you before --

MR. ACKER: You made it as one single clip.
That's a misrepresentation. And the next question and
answer made clear that, at the time of his deposition, he
had questions in mind. And you just left that out.

MR. SINGER: "Did you have anything specific in
mind? "

"No, I didn't."

1969

"Were there questions you had in mind?"

"Yes. I'm sure -- at the time, I'm sure I had
in mind questions that had been raised but weren't
answered."

"As you sit here, do you know what those
questions are?"

"Yes. I'm having a difficult time doing that,
but it, I believe --"

MR. ACKER: But you --

MR. SINGER: Let me finish.

"I'm having a difficult time doing that."

I asked him:

"Do you have anything specific in mind?"

"No, I don't."

I think that's fair use of the examination.

MR. ACKER: But you cut out the middle where he
said he had questions in mind at the time. You can't do
that

MR. JACOBS: Your Honor --

THE COURT: Mr. Jacobs?

MR. ACKER: But you played it as a clip as
though it was one continuous question and answer. You
left out the middle where he was asked and said he had
questions in mind at the time. That's clearly improper.
You can't do that.

1970

MR. SINGER: I don't think there is anything
improper in the use of this. I identified the specific
lines I was reading. He says that, about this press
release, my question to him before I used this
impeachment.

"Can you identify specifically what those
questions are?"

He said: "I'm sure I could."

And then I asked him: "Do you have anything
specific in mind?" And he wasn't identify anything
specifically at the time of his deposition.

THE COURT: All right. All right.

MR. ACKER: It's not --

THE COURT: Be quiet. If you want to right now
stand up and point out that you think there was something
that was left out of the clip, you may read it to the
witness, all right?

MR. ACKER: Yes.

(Proceedings continued in open court.)

MR. ACKER: Your Honor, if I might, I want to
read -- to have Mr. LaSala confirm that there were
portions of his testimony that was left out from the
clips that SKO's counsel played for him. And I'm going
to give him a copy of his deposition.

MR. SINGER: Your Honor, I think what you had

1971

asked is that the section be read.

THE COURT: Well, I think we need to confirm
whether or not it did, in fact, happen, Mr. Singer. And
I'll let Mr. LaSala look at his own testimony.

MR. ACKER: Mr. LaSala, will you look at page
54, please.

THE WITNESS: Okay.

MR. ACKER: And starting at the bottom of page
53, do you have that, line 24?

THE WITNESS: Yes.

MR. ACKER: So you were asked the following
questions and gave the following answers in the
deposition:

"What did you mean in your statement that
SCO's press release raised as many questions as
it answered?"

"Well, it was made in the context of
comments that Mr. McBride made about the effect
of Amendment Number 2 and the question of
copyright ownership. And it was intended to
point out to the reader that it wasn't as clear
as he was suggesting -- to the addressee, that
it wasn't as clear as he was suggesting."

And then you were asked the following question
and gave the following answer that we haven't heard:

1972

"And were there questions that you had in

mind at the time of this letter that Amendment

Number 2 raised but did not answer?"

"Yes. I'm sure -- at the time, I'm sure I

had in mind questions that had been raised that

weren't answered."

MR. ACKER: Did you give that testimony under
oath?

THE WITNESS: Yes.

MR. ACKER: That's all I have, Your Honor.

Q. BY MR. SINGER: And were you then asked:

"And, as you sit here, can you recall what

those questions might have been?"

A. That's what the transcript says.

Q. Yes. And you said:

"I'm having a difficult time doing that, but

I believe it relates to our interpretation of

Amendment Number 2, and the fact that there had

been previous statements made by us about

Amendment Number 2 and that there would be

subsequent statements made by us with respect to

its meaning, and, you know, things that hadn't

yet been articulated were being articulated or

were going to be articulated at some point in

the future."

1973

And then you were asked:

"And do you have anything specific in mind?"

And your answer was:

"No, I don't."

That's your testimony. Correct?

A. That's correct.

Q. Now, turning back to the June 26 release, after
that you proceeded, on August 4, to write another letter
to SCO, this one the letter that's identified as SCO
Exhibit 105, correct?

A. Yes, sir.

Q. And, if we go down to the bottom of that
letter, it says:

"Unless and until SCO is able to establish that
some particular copyright right is required for SCO to
exercise its rights under the APA, SCO's claim to
ownership of any rights in UNIX technologies must be
rejected and ownership of such rights, instead, remains
with Novell."

You wrote that, correct?

A. Yes.

Q. So, did you contemplate some process where SCO
would have to go to Novell and say: "Novell, we actually
need this copyright."

And then Novell would decide whether or not SCO

1974

could have it?

A. Essentially, yes.

Q. Now, if SCO doesn't own the copyrights, they'd
have to have a license in order to distribute UnixWare,
correct?

A. Yes.

Q. And they would have to have a license in order
to develop new code, correct?

A. Yes.

Q. And you agree, there is no explicit license in
the Asset Purchase Agreement to Santa Cruz to make use of
the UNIX copyrights, right?

A. I think that's correct.

Q. So, what you're talking about is an unwritten,
implied license. That's what, in your view, Santa Cruz
has and what SCO today has, an unwritten, implied
license, right?

A. Yes.

Q. So, the entire basis for SCO to run this
business would be an unwritten, implied license to use
UNIX and UnixWare copyrights, correct?

A. Yes. An implied license.

Q. Now, do you also know that, to bring lawsuits
to defend your intellectual property, to defend your
copyrights, you must either be a copyright owner or an

1975

exclusive licensee, correct?

A. I wouldn't care to comment on that.

Q. Well, you're an attorney who worked for
technology companies, works for a technology -- well, a
communications company right now, so you're familiar with
copyright law, are you not?

A. Somewhat. Not well enough to speak with
authority on it.

Q. So, are you saying, in August of 2003, when you
wrote this letter, you didn't know whether or not, in
order to be able to protect your copyrights, in order to
bring a copyright suit against someone you thought was
infringing your copyrights, you had to either own the
copyrights or be an exclusive licensee? You didn't know
that?

A. You know, I'm not saying I didn't know it. I
suspect the position is correct. But those were not
thoughts that were going through my mind at the time.

Q. Because you weren't thinking about what rights
SCO might need to protect as part of rights, of why it
would need the copyrights? That wasn't a concern to you?

A. I wasn't really thinking about or contemplating
the rights that SCO might need. I was contemplating what
the agreement said.

Q. But don't the agreements speak to what

1976

copyrights SCO requires in order to exercise its rights
under the agreement?

A. They do.

Q. And is one of the rights SCO has, the rights to
bring claims to protect its business?

A. SCO has the rights to bring claims to protect
its business, yes.

Q. And if it doesn't own the copyrights or have an
exclusive license, it can't bring a copyright
infringement claim, correct?

A. I don't know.

Q. You didn't know -- when you wrote this letter,
you didn't know, in August of 2003?

A. Right.

Q. Do you understand the difference between an
exclusive license, in that an exclusive license can't be
an implied license, it has to be something in writing?
Do you know that?

A. Yes. I know that. An exclusive license or an
express license?

Q. Well, you have to have -- in order for an
exclusive license, it has to be in writing, correct?

A. Yes.

Q. And we've already covered the fact that what
you thought Santa Cruz, SCO, has is not something in

1977

writing, some implied license, right?

A. Yes.

Q. And so, you have no basis to say, then, if you
didn't know that you needed to either be a copyright
owner or an exclusive licensee, with a written exclusive
license, that SCO didn't need the copyrights to enforce
its rights back in August of 2003, when you wrote this
letter, did you?

A. Could you say that again. I apologize.

Q. You didn't have a basis to say that the
copyrights weren't required for SCO to exercise its
rights if you didn't know, back in August of 2003, that
SCO couldn't bring copyright infringement suits to
protect its rights without either being an owner or an
exclusive licensee, right?

A. What I knew in 2003 was that we -- at this
point in 2003, that we had an Amendment Number 2 that
arguably granted to SCO certain copyrights, those that it
would need to exercise the rights that it had acquired
under the Asset Purchase Agreement. That was the focus
of my thought at the time. And I also knew that SCO had
never demonstrated to us that they had that -- that --
the need for a copyright to exercise their rights under
the APA. That's what was going through my mind at the
time.

1978

Q. Now, following this, in September and October,
you had Novell apply for copyrights; is that correct?

A. Yes.

Q. And, in fact, those were copyrights to the same
UNIX technology that AT&T had copyrighted and which Santa
Cruz had the copyright registrations for, correct?

A. I believe so, yes.

Q. And you told the copyright office that those
copyrights were owned by Novell, correct?

A. Yes.

Q. And, in October and September, you didn't go
public with the fact that you had acquired those
copyright registrations? At that time, you didn't go
public with that, correct?

A. Well, it's a public registration, so it's
public.

Q. But you didn't put out a press release to that
effect?

A. I don't believe we did.

Q. And you didn't put out your August 4 letter
in a press release at the time either, did you?

A. No.

Q. But, in December of 2003, December 22, 2003,
you did put out a press release that we've seen, correct?

A. Yes.

1979

Q. And that press release was one in which you
revealed that you did have -- you had applied for
copyrights and registered the copyrights earlier that
year, correct?

A. That's my recollection of what it said. I
don't have it in front of me. Actually, I do have it in
front of me. I apologize. Yes. That's what it says.

Q. And you didn't go public with those copyright
registrations in August, September, October or November.
You went public with them on December 22, correct?

A. Yes.

Q. Were you aware that December 22, 2003, was the
date that SCO was announcing its earnings?

A. No, I was not.

Q. Just as you weren't aware that May 28, 2003,
was also a date that SCO was announcing its earnings?

A. That's correct.

Q. So, both of those were coincidences. The date
you went public in May, May 28, was a coincidence to be
SCO earnings release, and the date you went public in
December, that date was also a coincidence?

A. Yes.

MR. SINGER: Would you give me one moment. I
have nothing further.

REDIRECT EXAMINATION

1980

BY MR. ACKER:

Q. Mr. LaSala, let me back up to the part where
Mr. Singer finished off on December 22. When did you
first learn that SCO had a press release on December 22,
2003?

A. An earnings release or a press release?

Q. When did you learn that SCO had an earnings
release on the 22nd of December, 2003?

A. Yesterday.

Q. Now, leading up to that December 22 release by
Novell, you testified on direct that part of the
motivation is that because Mr. McBride was in the
marketplace saying that SCO still owned the copyrights.
In addition to speaking on behalf of SCO, did you also
become aware of statements Mr. McBride made where he
seemed to be speaking on behalf of Novell?

A. Yes. It was one of the things that concerned
us was, in my recollection, in particular, is a comment
he made in an interview that had been published on the
web somewhere. I think it was in the July, mid-July time
frame, where he was not only asserting that SCO owned the
copyrights, but he was asserting that he was sure that,
if you asked Novell, they would say that they didn't.

And that caused us a great deal of concern, as
you might imagine.

1981

Q. And is that part of the reason that the press
release was issued in December of 2003?

A. Yes, it was. It had gotten to the point where,
again, Mr. McBride was making public statements about
SCO's ownership claims, and he had made at least one, and
I think others who worked for SCO had made similar
claims, that Novell would say that we didn't own them.

And so we felt the need to put before the
public the arguments that we were making with respect to
ownership and the rebuttal that we received from SCO.
And that's why we did this on December 22.

Q. Is it fair to say that Novell didn't have in
your corporate offices a calendar with a big red circle
around when SCO's earnings announcements were?

A. Not that I'm aware of. No. We certainly would
not have had that.

Q. Let me show you what Mr. Singer showed you, a
SCO exhibit that lists a number of communications that
you had or others had at Novell with IBM during the
2002/2003, time frame. Do you see that?

A. Yes.

Q. And Mr. Singer seemed to imply in his
questioning of you that somehow you had, during the
discovery process in this case, kept from SCO these
conversations. Do you recall that series of questions

1982

and playing clips from your deposition?

A. Yes.

Q. That document that actually lists the
conversations between folks at Novell and folks at IBM.
Was that provided to Mr. Singer during the course of
discovery?

A. Yes, it was.

Q. And was provided to Mr. Normand during the
course of discovery?

A. It was.

Q. So, those statements between IBM and Novell,
that was something that these guys have had for years.
Would that be fair?

A. Yes.

Q. Let me show you what we've marked as L-19.
And, on that last point, did you ever try and keep secret
from the lawyers for SCO, during the course of discovery,
these conversations that you have testified about between
yourself and representatives of IBM?

A. No. Of course not.

Q. And what is L-19, sir?

A. L-19 is an August 20, 2003, letter to
Mr. McBride from me.

Q. And, in the letter, are you requesting
something of SCO?

1983

A. Yes. We're requesting that SCO provide us with
the source in binary code due to Novell under the asset
purchase agreement pursuant to the technology license
agreement that we -- that the parties had executed back
in 1995.

Q. Okay. And then, so the jury understands, can
you explain in simple terms what you understand the
technology licensing agreement to be?

A. The technology licensing agreement was an
agreement between Novell and SCO, at the time the Asset
Purchase Agreement was entered into, whereby Novell would
get a license to all of the assets that had been
transferred to SCO. We would have a license back to
those. And Novell would get a license to newly developed
code by SCO after it acquired this business.

Q. And were the assets to which Novell was
obtaining a license, were they limited to assets that
were actually transferred during -- in the Asset Purchase
Agreement?

A. No. They were -- they were -- they were to
code that SCO developed subsequent to the Asset Purchase
Agreement.

Q. But, in your letter, what is it you're
requesting?

A. We are requesting source and binary code under

1984

the Asset -- due to Novell under the Asset Purchase
Agreement. And we're -- we make reference to the assets,
the definition of assets in the APA, and we make
reference to the excluded assets. And we say that the
included assets includes all versions of UNIX and
UnixWare, including UNIX source code products in UNIX
binary product releases.

MR. ACKER: Your Honor, I move for the
admission of L-19.

MR. SINGER: No objection.

THE COURT: It will be admitted.

(Novell Exhibit L-19 received in evidence.)

Q. BY MR. ACKER: And when you were asking for SCO
to get back to you the source code, were you asking
for the copyrights or simply the source code?

A. The source code.

Q. So, was it your understanding, in August of
2003, that the technology license agreement provided for
the license back of assets that had been transferred that
did not include the copyrights?

A. That is correct.

MR. ACKER: I don't have anything else, Your
Honor.

MR. SINGER: Your Honor, I have a couple
questions on recross.

1985

THE COURT: Go ahead.

RECROSS EXAMINATION

BY MR. SINGER:

Q. If you look at L-19, Mr. LaSala?

A. Yes, sir.

Q. It's on the screen. The second paragraph. It
says:

"It follows from the foregoing that Novell is
entitled to copies of the source and binary code for the
versions of UNIX and UnixWare under SCO's control."

That was under SCO's control because SCO had
ownership of it, correct?

A. No.

Q. Would you turn to Exhibit 162, the actual
technology licensing agreement that this letter refers
to.

A. I don't have it. I'm sorry.

Q. It's on the screen.

A. I beg your pardon.

Q. And if we turn to, I think it's the third page
that talks about ownership. Have you ever seen this
provision which says that, as between Novell and SCO, the
ownership of the licensed technology shall reside in SCO?

A. I see that.

Q. Have you ever seen that before?

1986

A. I'm sure I have. I don't recall it at this
moment, but I'm sure I have, since I've read this
document.

Q. And if I recall correctly, your testimony was
that you could see how a reasonable person would look at
the technology licensing agreement and conclude that
Novell did not have ownership of the copyrights, correct?

A. I don't think that quite accurately
characterizes the testimony.

Q. Well, the jury heard your earlier testimony, so
we'll go with what they recall.

A. Okay.

Q. One further area of questioning. You were
asked about the consistency of your testimony in your
deposition about the contacts with IBM, asking Novell to
waive rights. Do you recall that?

A. Yes.

Q. Now, the document which set forth the
conversations you had with Mr. Marriott and Mr. Jacobs
and Mr. Rosenberg from IBM, you have that before you?

A. I do

MR. SINGER: In fact, I'd like to move into
evidence that exhibit.

MR. ACKER: You already did.

MR. SINGER: Okay. If it's in evidence.

1987

THE COURT: Which number is it? Remind me.

MR. SINGER: It's 530.

Q. BY MR. SINGER: This was presented in a
deposition where you were a corporate representative in
May, 2007, correct?

A. That's my recollection.

Q. The testimony that I showed you at the
beginning of your cross examination --

THE COURT: One second. 530 is not in.

MR. SINGER: Okay.

MR. ACKER: I apologize, Your Honor. I'm
fairly sure that Mr. Singer asked for it to be admitted.
I didn't object.

MR. SINGER: I didn't think I had, but I will
now.

THE COURT: Okay. He's going asking now. Do
you object now?

MR. ACKER: No.

THE COURT: Okay. It will be admitted.

(SCO Exhibit 530 received in evidence.)

Q. BY MR. SINGER: The deposition that you
prepared this for as a corporate representative and we
questioned you about, it was in May of 2007. Do you
recall that?

A. Yes.

1988

Q. However, you had given an earlier deposition in
February, 2007, in your individual capacity, correct?

A. I did.

Q. And the testimony that you were presented with
in my cross examination, where you said that there had
not been these requests for IBM to waive rights, that was
given in your February, 2007, deposition, correct?

A. I believe that's correct, subject to your
characterization of my testimony, which we have been
through already.

Q. And, at that time, in February, 2007, neither I
nor SCO had the document that's in front of you, SCO
Exhibit 530, did we?

A. No.

MR. SINGER: Okay. Thank you.

THE COURT: Counsel, may this witness be
excused?

MR. ACKER: Can I ask one more question? I
promise one.

THE COURT: Each attorney gets a third round
one time in the entire trial. If you want to take it
right now, you may.

MR. ACKER: I'll save it, Your Honor.

MR. SINGER: We do not perceive a need to
recall Mr. LaSala.

1989

MR. ACKER: No.

THE COURT: He may be excused, then.

MR. ACKER: Thank you, Your Honor.

THE COURT: That means you can return to
Virginia, and you don't have need to worry about being
recalled, but, Mr. LaSala, I will instruct you not to
discuss your testimony with any other witnesses, in the
presence of any other witness, or indicate in any way
what your testimony was. Thank you.

THE WITNESS: Thank you, Your Honor.

THE CLERK: Mr. LaSala, you may want to go out
that door.

THE COURT: We'll go ahead and break for the
afternoon.

MS. MALLEY: All rise for the jury, please.

(Jury leaves the courtroom.)

THE COURT: Do you have anything, counsel?

MR. SINGER: We don't.

MR. ACKER: No, Your Honor.

THE COURT: Okay. We'll see you at 8:30 in the
morning. We do have hearings this afternoon, Counsel.

MR. SINGER: Thank you, Your Honor.

(Whereupon the proceedings were concluded for the day.)

1990

REPORTER'S CERTIFICATE
STATE OF UTAH )

) ss.
COUNTY OF SALT LAKE )

I, REBECCA JANKE, do hereby certify that I am a
Certified Court Reporter for the State of Utah;

That as such Reporter I attended the hearing of
the foregoing matter on March 22, 2110, and thereat
reported in Stenotype all of the testimony and
proceedings had, and caused said notes to be transcribed
into typewriting, and the foregoing pages numbered 1936
through 1990 constitute a full, true and correct record
of the proceedings transcribed.

That I am not of kin to any of the parties and
have no interest in the outcome of the matter;